Cineworld Is Said Nearing Deal to Buy Regal for U.S. Growth
(Bloomberg) -- U.K.’s Cineworld Group Plc is nearing an agreement to buy U.S. cinema operator Regal Entertainment Group for about $3.6 billion to tap into the world’s largest market, according to people familiar with the matter.
Cineworld and Regal, controlled by billionaire Philip Anschutz, could reach a deal as early as Monday, the people said, asking not to be identified because the deliberations are private. Cineworld’s all-cash $23 a share offer has the backing of Anschutz, the people said. Talks, though advanced, could still fall apart, they said.
Regal shares climbed 1.8 percent to $20.55 in U.S. trading, while Cineworld stock was trading down 1.6 percent in London at 2.45 pm local time.
Cineworld is seeking significant cost synergies with Regal acquisition, the people said, without providing specific numbers. The London-based firm plans to modernize Regal’s movie theaters and ticketing systems post acquisition, the people said. It had analyzed other takeover opportunities and decided that Regal was the best available target, they said.
A representative for Cineworld declined to comment. A representative for Knoxville, Tennessee-based Regal couldn’t be reached for comment outside of regular business hours.
Cineworld’s shares slumped this week after it confirmed talks with Regal and said it was planning to fund the acquisition with a stock sale and debt. The U.K. company’s main shareholder Global City Holdings, which has a 28 percent stake, has committed to subscribe to the equity increase. The purchase of Regal would be classified as a reverse takeover, and a deal would require approval of Cineworld’s shareholders, the company has said.
Acquiring Regal 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 online-video providers like Netflix Inc. give audiences more reasons to stay home. A deal to reshape Regal, the second-biggest cinema chain in the U.S., revives an unsuccessful attempt to sell the company in 2014.
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