NEW YORK (Reuters) – Cineworld Group, a British operator of movie theaters, is in talks to acquire US peer Regal Entertainment Group for approximately $3.6 billion in cash, the companies said on Tuesday.
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A deal between the two would put the combined company in a better position to take market share from US industry leader AMC Entertainment Holdings Inc, and also give it more scale to fight increasing competition from Netflix Inc, Apple Inc and other digital outlets.
Regal said in a statement that Cineworld’s all-cash offer values it at $23 per share, confirming an earlier Reuters report. No agreement has been reached and there is no assurance that any transaction will result, Regal added.
Cineworld added in a separate statement released later that it was in advanced discussions to acquire Regal and was finalizing due diligence on its offer.
Cineworld said it would finance its bid through a ‘mixture of incremental debt and a material equity raise by way of a rights issue, including a commitment to full subscription’ from its largest shareholder, Global City Holdings.
Global City Holdings is a Polish holding company that owns entertainment and real estate businesses in Europe and Israel. Global City owns 28 percent of Cineworld, according to Thomson Reuters data.
Regal shares jumped as much as 16 percent after Reuters reported the deal talks. They closed up 7.6 percent at $19.63 in New York, giving the company a market value of about $3 billion. Cineworld has a market value of 1.9 billion pounds ($2.5 billion).