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Cineworld Group Plc - Acquisition of Cineplex Inc.



Proposed C$2.8bn (US$2.1bn) acquisition of Cineplex Inc.



Cineworld to acquire Cineplex for C$34 per share in cash - acquisition unanimously supported by Cineworld's Board of Directors


Acquisition of the largest cinema operator in Canada with a highly attractive, well-invested portfolio and a 75 per cent box office market share


Transaction an extension of Cineworld's growth strategy adding 165 cinemas and 1,695 screens, and creating the leading North American cinema operator[i]

Highly synergistic transaction, with approximately US$130m of annual pre-tax combination benefits by the end of FY 2021


Implies an enterprise value for Cineplex of C$2.8bn (US$2.1bn) and a 2019E EBITDA multiple (including combination benefits) of 6.3x[ii]

Application of Cineworld's operational best practice across the Cineplex exhibition circuit

Expected to be double digit accretive to earnings and free cash flow in the first full year following completion (FY 2021)

Return on invested capital expected to exceed Cineworld's cost of capital in FY 2020

Debt financed acquisition, with diligent focus on capital allocation targeting leverage towards 3x net debt / EBITDA[iii] by end of FY 2021

Subject to Cineworld and Cineplex shareholder approval, and other regulatory approvals, completion is expected to occur by the end of H1 2020

Cineworld's largest shareholder (Global City Theatres B.V., which holds an approximate 28 per cent stake in Cineworld) has agreed to vote in favour of the acquisition

Anthony Bloom, Chairman of Cineworld, said:

"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.

"Going forward our immediate post-acquisition objectives will be to combine Cineplex with our US business to create a leading North American cinema operator; maximise the synergistic combination benefits of the Cineplex acquisition; continue the currently successful refurbishment of the Regal chain in the US; and focus strongly on a structured debt reduction program targeting leverage towards 3x net debt / EBITDA by the end of 2021.

"The Board unanimously recommends the Acquisition."

Commenting on the acquisition, Mooky Greidinger, CEO of Cineworld, said:

"Cineplex is a great business. It is the number one cinema operator in Canada and is well positioned for further growth. The combination of Cineplex and Regal will create the leading North American cinema operator with unrivalled scale and opportunity. 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.

"The acquisition of Cineplex strengthens our belief in the theatrical business, one of the most affordable out-of-home forms of entertainment. We constantly strive to provide the best customer experience and maintain technological leadership and we are excited about Cineworld's prospects for 2020 and beyond as we look to complete the Cineplex transaction, our US refurbishment programme and the roll-out of Unlimited, and we look forward to the great selection of movies to come."