Regal Theater Owner's Cineplex Buy Gets Shareholder Approval

Scotiabank Theatre Toronto - Cineplex Entertainment - Publicity -H 2016
Courtesy of Cineplex Entertainment

The deal, which will create one of the world's largest exhibition companies with over 11,200 screens globally, is expected to close in April.

Regal owner Cineworld's planned $2.1 billion takeover of Canadian exhibitor Cineplex has received approval from respective company shareholders.

U.K. exhibition giant Cineworld said its investors had voted 99.5 percent in favor of the takeover, first unveiled in December, to acquire Cineplex and create one of the world's largest cinema companies with over 11,200 screens globally.

"With over 99 percent of votes cast in favour of the acquisition, it demonstrates a resounding vote of confidence in support of the transaction and board strategy, which on completion will create the leading North American cinema operator with significant scale and opportunity," Anthony Bloom, Cineworld chairman, said in a statement.

Cineplex shareholders also Tuesday voted 99.92 percent in favor of the takeover by Cineworld during their own special shareholders meeting in Toronto.

Cineworld will, in the proposed deal, pay $1.65 billion in cash, plus take on debt. Cineplex operates 165 cinemas with 1,695 screens and dominates the Canadian theatrical market. Cineplex would join Cineworld's portfolio, which already includes such brands as Regal, Picturehouse and Cinema City. The company's management has called the Canadian market "stable and attractive."

Anthony Bloom, chairman of Cineworld, in December said the deal "fits squarely within our strategic acquisition objectives and is expected to be strongly earnings and cash flow accretive." He added that the firm's "immediate post-acquisition objectives will be to combine Cineplex with our U.S. business to create a leading North American cinema operator; maximize the synergistic combination benefits of the Cineplex acquisition; continue the currently successful refurbishment of the Regal chain in the U.S.; and focus strongly on a structured debt reduction program."

"Cineplex is a great business. It is the number one cinema operator in Canada and is well positioned for further growth," added Cineworld CEO Mooky Greidinger. "The combination of Cineplex and Regal will create the leading North American cinema operator with unrivaled scale and opportunity. By deploying our operational best practices, we expect the transaction to create compelling value for shareholders."  

Cineworld has said the financial benefits of the deal would include approximately $65 million of cost efficiencies and $65 million in revenue synergies from such moves as bringing its operational best practices, its subscription program and additional advertising to Canada. 

The acquisition has been subject to Cineworld and Cineplex shareholder approvals and regulatory consents. Cineworld's largest shareholder, the Greidinger family's Global City Theatres, which owns a stake of approximately 28 percent, previously agreed to vote in favor of the deal. Cineworld expects to close the deal by early April.

Feb. 11, 3 p.m. Updated with the results of a special shareholders meeting by Cineplex investors in Toronto.