LONDON: Britain’s Cineworld Group sealed an agreement to buy larger US peer Regal Entertainment Group on Tuesday for $3.6 billion in cash, a deal that would create the world’s second largest movie theater operator.
The takeover would put the combined company in a better position to take on industry leader AMC Entertainment Holdings Inc, and give it more scale to fight growing competition from Netflix Inc, Apple Inc. and other digital outlets.
Regal is three times larger than Cineworld by market value and the combined company would have about 9,542 screens, with 7,315 screens in the US.
Movie theaters have been struggling to win back viewers as competition from digital streaming platforms draws movie-goers away.
Cineworld CEO Mooky Greidinger brushed aside those concerns.
“When they go to the cinema, they go to the cinema and who loves to go to the cinema more than the Americans?,” Greidinger told Reuters.
Greidinger said he expects to boost margins and revenue at Regal, adding that Cineworld currently has margins of 22 percent, while Regal has margins of about 19.6-19.7 percent.
Rival AMC is majority owned by China’s Dalian Wanda Group, which has bought a slew of cinema assets around the world, including taking a controlling stake in US film studio Legendary Entertainment last year.
The approach by Cineworld was considered well-timed as shares in the US company have plunged more than 20 percent over the past year on concerns over stagnant admissions at theaters.
The deal value of $23 per Regal share represents a premium of about 12 percent to Regal’s closing price on Monday and implies an enterprise value — equity plus debt — of $5.8 billion.
Regal shares have risen 13.6 percent since Reuters first reported in November that Cineworld had approached Regal over a potential deal. Cineworld shares have fallen about 20 percent in the period.
Cineworld said it expected the deal to “strongly” add to earnings in the first full year following completion, currently expected in the first quarter of 2018.
The combined company is expected to deliver pre-tax benefits of $100 million, as well as additional annual benefits of $50 million, the companies said.
Cineworld said it expected to fund the deal through a rights issue to raise about $2.3 billion, with the rest provided by committed debt facilities and existing cash.
Cineworld expects to be able to maintain its existing dividend policy after the deal closes.
However, brokerage Peel Hunt cut its recommendation to “hold” from “add,” citing long-term concerns.
While the deal provided a step-change in profitability and cash flow for Cineworld, “the long-term investment proposition had fundamentally changed as a result of higher debt and earnings becoming heavily dominated by mature markets,” Peel Hunt analysts wrote.
Cineworld targets US expansion with $3.6bn deal to buy Regal
Cineworld targets US expansion with $3.6bn deal to buy Regal
Saudi Arabia’s cultural sector is a new economic engine between Riyadh and Paris, says ambassador
RIYADH: Culture has become a fundamental pillar in bilateral relations between France and Saudi Arabia, according to the French Ambassador to the Kingdom, Patrick Maisonnave.
Maisonnave noted its connection to the entertainment and tourism sectors, which makes it a new engine for economic cooperation between Riyadh and Paris.
He told Al-Eqtisadiah during the opening ceremony of La Fabrique in the Jax district of Diriyah that cultural cooperation with Saudi Arabia is an important element for its attractiveness in the coming decades.
La Fabrique is a space dedicated to artistic creativity and cultural exchange, launched as part of a partnership between the Riyadh Art program and the French Institute in Riyadh.
Running from Jan. 22 until Feb 14, the initiative will provide an open workspace that allows artists to develop and work on their ideas within a collaborative framework.
Launching La Fabrique as a space dedicated to artistic creativity
The ambassador highlighted that the transformation journey in the Kingdom under Vision 2030 has contributed to the emergence of a new generation of young artists and creators, alongside a growing desire in Saudi society to connect with culture and to embrace what is happening globally.
He affirmed that the relationship between the two countries is “profound, even cultural par excellence,” with interest from the Saudi side in French culture, matched by increasing interest from the French public and cultural institutions unfolding in the Kingdom.
Latest estimates indicate that the culture-based economy represents about 2.3 percent of France’s gross domestic product, equivalent to more than 90 billion euros ($106.4 billion) in annual revenues, according to government data. The sector directly employs more than 600,000 people, making it one of the largest job-creating sectors in the fields of creativity, publishing, cinema, and visual arts.
Saudi Arabia benefiting from French experience in the cultural field
Maisonnave explained that France possesses established cultural institutions, while Saudi Arabia is building a strong cultural sector, which opens the door for cooperation opportunities.
This comes as an extension of the signing of 10 major cultural agreements a year ago between French and Saudi institutions, aiming to enhance cooperation and transfer French expertise and knowledge to contribute to the development of the cultural system in the Kingdom.
He added that experiences like La Fabrique provide an opportunity to meet the new generation of Saudi creators, who have expressed interest in connecting with French institutions and artists in Paris and France.
La Fabrique encompasses a space for multiple contemporary artistic practices, including performance arts, digital and interactive arts, photography, music, and cinema, while providing the public with an opportunity to witness the stages of producing artistic works and interact with the creative process.
