Cineplex Boosts Clout In Canada With Deal To Buy Screens From Empire Theaters

Canada’s largest exhibition chain says that it agreed to pay $200M for 26 theaters with 218 screens, mostly in eastern territories including Nova Scotia, New Brunswick, Newfoundland, and Prince Edward Island. That gives the company “a truly national, coast-to-coast presence,” Cineplex CEO Ellis Jacob says. He adds that “our media and promotional partners will now benefit from a national platform.” The company promised to upgrade the theaters — which is what acquirers usually say in announcements like this — saying it “may” add its UltraAVX large-screen auditoriums, padded recliner seating, and gaming rooms to “certain locations.” The company also says that it can fund the deal with its existing credit facilities but “will continue to assess its financing options.” The companies expect the acquisition to close in about two months. The 26 theaters that Cineplex is buying generated about $113M in revenue last year. With upgrades, the company says that the deal will be “immediately accretive to earnings per share and adjusted free cash flow per share.” Stifel Nicolaus’ Benjamin Mogil says that the deal is “relatively expensive” compared to recent theater acquisitions in the U.S., but agrees that once Cineplex improves the venues “growth can be re-accelerated.” The company’s shares are up 2.6% in early trading on the Toronto exchange.

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