Cineworld PLC (LON:CINE) is swooping for Canada’s largest cinema chain in a deal that would almost double its size and put the group on the cusp of the FTSE 100.
The debt-financed acquisition places an enterprise value (equity value plus debt) of US$2.1bn on Cineplex Inc, owner of 1,695 screens.
The deal, which would make the UK group North America’s largest operator, has the support of Cineworld’s board and, crucially, its 28% shareholder, Global City Theatres.
Synergies from the combination are expected to be in the order of US$130mln a year, while the transaction will also enhance earnings and cash flow by double digits in the first full year after acquisition.
In March last year Cineworld completed the transformational US$3.4bn purchase of Regal Entertainment Group to catapult up to number two in the world rankings.
"The board of Cineworld believes that the acquisition of Cineplex is in the interests of its shareholders as it fits squarely within our strategic acquisition objectives and is expected to be strongly earnings and cash flow accretive,” said Anthony Bloom, Cineworld’s chairman.
Chief executive Mooky Greidinger called Cineplex a “great business” that was “well-positioned for future growth”.
“The combination of Cineplex and Regal will create the leading North American cinema operator with unrivaled scale and opportunity,” he added.
“By deploying our operational best practices, we expect the transaction to create compelling value for shareholders and to be strongly EPS and free cash flow accretive.”