Cineworld in Talks to Buy Regal for More Than $3B

By Baigorri, Manuel; Nair, Dinesh et al. | Daily Herald (Arlington Heights, IL), November 30, 2017 | Go to article overview

Cineworld in Talks to Buy Regal for More Than $3B


Baigorri, Manuel, Nair, Dinesh, Bloomberg, Anousha Sakoui, Daily Herald (Arlington Heights, IL)


Byline: Manuel Baigorri, Dinesh Nair and Anousha Sakoui Bloomberg

Britain's Cineworld Group is in talks to purchase Regal Entertainment Group, the movie-theater chain controlled by billionaire Philip Anschutz, for more than $3 billion to double its size and create a bigger international rival to industry leader AMC Entertainment Holdings Inc.

The companies are negotiating a price for Regal of $23 a share, they said in separate statements, confirming earlier reports by Reuters and Bloomberg. The talks could still fall apart, the companies said. Cineworld declined as much as 16 percent, the most in a decade, after saying it would fund the acquisition with a stock sale and debt. The shares were down 15 percent as of 10:14 a.m. in London.

The deal would let Cineworld expand beyond its home market, as Britain's plan to leave the European Union weighs on consumer spending, and add thousands of screens as the industry faces intensifying competition from online-video providers. A deal to reshape Regal, the second-biggest cinema chain in the U.S., revives an unsuccessful attempt to sell the company in 2014.

"It's probably useful to be bigger in the industry now when everyone's concerned about video on demand, Netflix and the shortening of exclusivity periods for cinemas," said Owen Shirley, an analyst at Berenberg in London. "If you're a bigger player, you've got more negotiating power with the Hollywood studios."

Regal and its rivals in the U.S. theater industry are under pressure as streaming services like Netflix Inc. invest heavily in original movies, giving audiences more reasons to stay home. Movie attendance has stagnated in the U.S., and many films this year have failed to meet expectations at the box office. The summer season -- usually the most lucrative for the industry -- was the worst since 2006.

Knoxville, Tennessee-based Regal had been valued at $2.83 billion based on trading earlier Tuesday, while Cineworld has a market capitalization of 1. …

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