Cineworld will buy U.S. Regal Entertainment for $ 3.6 billion


(Reuters) – Cineworld Group Plc ( CINE.L ) of Great Britain agreed to buy the American film operator Regal Entertainment Group ( RGC.N ) for $ 3.6 billion In cash, the companies said on Tuesday.

Stock Image: Workers repair a poster at a Cineworld Cinema in Bradford North of England, March 24, 2016. REUTERS / Phil Noble

An agreement would place the combined company in a better position to face the leader from American industry AMC Entertainment Holdings Inc ( AMC.N ), and also gives it more scale to fight the growing competition from Netflix Inc ( NFLX.O ), Apple Inc ( AAPL.O ]) and other digital outputs.

The value of the $ 23 per share Regal share represents a premium of about 12 percent of Regal's closing price on Monday and implies a business value – capital plus debt – of $ 5.8 billion.

Regal shares have risen 13.6 percent since Reuters first reported in November that Cineworld had approached Regal for a possible deal.

Cineworld said it expected the agreement to "add" strongly to earnings in the first full year after completion, currently expected in the first quarter of 2018.

The combined company is expected to generate profits before taxes of $ 100 million, as well as additional annual benefits of $ 50 million, the companies said.

Cineworld said it expected to finance the agreement through a rights issue to raise around 1.7 billion pounds ($ 2.3 billion), and the rest provided by committed debt facilities and existing cash.

Cineworld also hopes to maintain its existing dividend policy after the deal is closed.

($ 1 = 0.7449 pounds)

Report of Arathy S Nair in Bengaluru; Edition of Tom Pfeiffer and Mark Potter

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