Regal Cinemas Confirms Merger Talks With UK’s Cineworld

By Dade Hayes, Nancy Tartaglione

UPDATED with Regal statement: Shares in Regal Cinemas, the major exhibition circuit controlled by Philip Anschutz, spiked more than 10% this afternoon with the company confirming it is being pursued by UK theatre chain Cineworld.

Reuters had the initial report on the discussions. Late this afternoon, Regal put out a statement that an all-cash offer of $23 a share (more than $3 higher than today’s closing price) was on the table. “No agreement has been reached, and there is no assurance that any transaction will result,” the company said. “Regal Entertainment Group does not intend to make any further comment, or respond to any inquiries, until an agreement, if any, is reached, or discussions have been terminated.”

Each company has a market capitalization in the range of $2.5 billion-$3 billion. A person with knowledge of the international exhibition landscape told Deadline a merger would create a company comparable in size to AMC. At $23 a share, the offer is a healthy premium on the company’s trailing price-to-earnings ratio.

As both companies are public, another prospective buyer could come in with a spoiler bid. With the exhibition sector under some pressure due to ongoing stress on the traditional movie model, another consolidation wave has seemed likely.

In heavy trading, Regal’s stock closed at $19.63, up nearly 8%. Earlier, it reached a high for the day of $21.28. Cineworld shares popped 6% today on the London exchange. Other U.S. exhibitors have also posted significant market gains on the news.
Regal rose to prominence on the U.S. movie scene after Anschutz, a crafty and reclusive billionaire based in Colorado, started buying up distressed debt of failing U.S. circuits in the 1990s for pennies on the dollar. For a time, before the now-Chinese-backed AMC Entertainment made some aggressive moves to expand, Regal was the No. 1 chain, known for pushing the edge of the megaplex envelope. In 2014, Regal’s efforts to sell itself did not lead to a deal, and the next year the No. 2 U.S. exhibitor ended the sale process.

The company recently made news by saying it planned to experiment with dynamic pricing models that would enable it to charge more for top movie titles in peak periods. Like other circuits, it blamed a “challenging box office environment” for soft results in the third quarter.

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