Monday 11 December 2017

Cineworld to buy major Polish movie theatre business

File photo dated 6/12/2012 of Cineworld Cinemas in Burton On Trent, Staffordshire. Multiplex chain Cineworld is to acquire one of Europe's largest cinema operators in a deal that will boost its estate to nearly 2,000 screens. PRESS ASSOCIATION Photo. Issue date: Friday January 10, 2014. The proposed tie-up with Cinema City will give it leading positions in Poland, Israel, Hungary, Romania, the Czech Republic, Bulgaria and Slovakia. The cash and shares deal, which is due to complete in March, values Cinema City at around £500 million. See PA story CITY Cineworld. Photo credit should read: Rui Vieira/PA Wire
File photo dated 6/12/2012 of Cineworld Cinemas in Burton On Trent, Staffordshire. Multiplex chain Cineworld is to acquire one of Europe's largest cinema operators in a deal that will boost its estate to nearly 2,000 screens. PRESS ASSOCIATION Photo. Issue date: Friday January 10, 2014. The proposed tie-up with Cinema City will give it leading positions in Poland, Israel, Hungary, Romania, the Czech Republic, Bulgaria and Slovakia. The cash and shares deal, which is due to complete in March, values Cinema City at around £500 million. See PA story CITY Cineworld. Photo credit should read: Rui Vieira/PA Wire

Cineworld Group said it will buy Poland's Cinema City International's movie theatre business in a cash and stock deal.

The cinema operator said it will pay CCI £272m (€329m) in cash and upon completion of the deal, CCI will hold 24.9pc of its shares.

Cineworld said it expects the deal to add to adjusted earnings per share in full year 2014 and be substantially accretive thereafter.

The enlarged company would be headed by CCI's Chief Executive Mooky Greidinger.

Warsaw-listed CCI would stay listed in Poland and keep its property interests and film distribution business, Cineworld spokeswoman Elly Williamson told Reuters.

The deal will be funded through a fully underwritten rights issue to raise about £110m and new debt facilities.

"Fundamentally, the rationale for the deal centres around access to developing economies in Europe, and for Cineworld to leverage all its know-how in the multiplex market to capitalise on the opportunities in these territories," N+1 Singer analyst Sahill Shan wrote in a note.

Cinema City is the largest operator of multiplex cinemas in Israel and central and eastern European countries such as Slovakia, Czech Republic and Bulgaria, according to the company's website.

The deal, expected to be completed in March, will create a chain of 201 cinemas with 1,852 screens, making Cineworld the second largest player in Europe after Odeon Cinemas Ltd .

Cinema City Chief Executive Mooky Greidinger told Reuters the combined company planned to open 548 screens over the next three years.

Greidinger, who will head the combined company, said some of these projects were already underway and 170 of the screens would be in the United Kingdom.

Cineworld's unlisted British competitor Vue Entertainment bought Poland's No. 2 multiplex operator Multikino last year.

Cineworld Chairman Anthony Bloom will retain his current role in the combined company.

In November last year, Cineworld said its founder and CEO, Steve Wiener, would step down in March.

Cinema City's film distribution business is also a part of the deal. The Polish company, which will keep its property interests, will stay listed in Warsaw, Cineworld spokeswoman Elly Williamson told Reuters.

Cineworld said it identified cost synergies of 2 million pounds, the majority of which are expected to be realised in financial year 2014.

The deal will be funded through a fully underwritten rights issue to raise about 110 million pounds and through debt.

"The acquisition appears to be a genuine attempt to gain exposure to growth markets, as opposed to simply gaining scale," Peel Hunt analyst Nick Batram said.

Cineworld shares were up 7 percent at 419 pence on the London Stock Exchange at 1020 GMT. Cinema City shares rose 16 percent to 35 zloty on the Warsaw Stock Exchange.

Reuters

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