In another major consolidation in the movie theater industry, Britain’s Cineworld Group has agreed to acquire Regal Cinemas for $3.6 billion to create the world’s second-largest theater owner.
The deal gives Cineworld, which primarily operates in Europe, access to North America, the largest box-office market in the world. Regal, whose brands include Regal Cinemas, United Artists, and Hollywood Theaters, is the second-largest cinema operator in the U.S. behind Chinese-owned AMC Entertainment with 7,315 screens at 561 sites.
AMC became the No. 1 exhibitor by acquiring Carmike Cinemas last year.
“Regal is a great business and provides Cineworld with the optimal platform on which we can continue our growth strategy,” Cineworld CEO Mooky Greidinger said in a news release. He added, “Consolidation is an important move forward and the best practices we have successfully rolled out across Europe will be the key driver to continued success.”
As the Los Angeles Times reports, theater chains have been combining amid growing competition from streaming services such as Netflix, Amazon Prime, and iTunes that allow viewers to watch films at home.
Additionally, studios, such as The Walt Disney Co., “are exerting more control over when and how their biggest films are shown, putting pressure on operators,” The New York Times said.
Box-office sales in the U.S. and Canada were particularly sluggish this summer and are down 4% from the same time a year ago, depressing theater stocks. Regal’s profit dropped 73% to $11 million during the three months that ended Sept. 30.
Under the merger agreement, Regal can seek and consider offers from other bidders until Jan. 22. Cineworld’s offer represents a 43% premium over Regal’s 30-day average share price of $16.06, the company said. Anschutz Corp., which holds 67% of Regal’s voting power, has agreed to support the deal.
“We believe this partnership with Cineworld will enhance Regal’s ability to deliver a premium movie-going experience for customers and further build upon our strategy of introducing innovative concepts and premium amenities designed to enhance the value of our theater assets,” Regal CEO Amy Miles said.