In a move that was presaged last week, UK exhibition chain Cineworld is to acquire Regal Cinemas, the circuit controlled by Philip Anschutz. The $3.6B deal will create the world’s second largest cinema group after AMC, operating in 10 countries with 9,542 screens across the U.S. and Europe. Shares in Cineworld dipped 3.75% in early-morning London trading before beginning a rebound.
The agreement also includes a “go shop period,” which will allow Regal to actively solicit and evaluate competing offers. As both companies are public, watchers have mentioned that another prospective buyer could come in with a spoiler bid. The exhibition sector is under some pressure due to ongoing stress on the traditional movie model, and consolidation has been seen as the order of the day.
The “go shop period” lasts until January 22, and if Regal does not receive a “superior” proposal, Cineworld hopes to close the deal in the first quarter of 2018. The agreement comes after Cineworld made an all cash offer of $23 per share on November 28.
Cineworld operates 2,217 screens across 232 sites in the UK, Ireland, Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania and Israel. Regal operates 7,315 screens in 561 theaters in 43 U.S. states along with Guam, Saipan, American Samoa and the District of Columbia. Each company has a market capitalization in the range of $2.5B-$3B.
Cineworld Chief Executive Mooky Greindinger said Regal was a “great business” and both companies were “strongly committed to bringing a high-end cinematic experience to their customers.”
“We have long had high respect for Regal and for its strong position in the largest box office market in the world and we are delighted that the Regal Directors have unanimously agreed to recommend our offer to their shareholders. Consolidation is an important move forward and the best practice we have successfully rolled out across Europe will be the key driver to continued success,” he added.
Regal Chief Executive Amy Miles added that the deal would allow the two companies to introduce more “innovative” cinema concepts and “premium amenities.”
“We believe the transaction announced today provides compelling value for our stockholders,” she said. “The combination of our two great companies, Cineworld’s tremendous success in the UK, as well as other markets they have entered since, and Cineworld’s commitment to maintain a strong presence in the U.S. and Knoxville (TN), provide a global platform positioned for continued growth and innovation.”
Deadline’s International Editor, Nancy Tartaglione, contributed to this report