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Cineworld to buy Cineplex in $2.8-billion deal for Canada's largest theatre chain

Last Updated Dec 16, 2019 at 7:57 am PDT

People make their way an escalator at the Cineplex Entertainment company's annual general meeting in Toronto on May 17, 2017. THE CANADIAN PRESS/Nathan Denette
Summary

Cineplex Inc. has agreed to a friendly takeover deal that would see Cineworld Group PLC pay $34 per share in cash

If the deal is approved, Cineplex will become part of a global company listed on the London Stock Exchange

Cineplex still has seven weeks to solicit and negotiate with other potential buyers

TORONTO — Cineplex Inc. has agreed to a friendly takeover deal that values the operator of Canada’s largest chain of movie theatres at $2.8 billion, including debt.

Cineworld Group PLC has agreed to pay $34 per share in cash, a 42 per cent premium to the closing price for Cineplex shares Friday.

Cineworld will also take on the debt owed by the Toronto-based company, which has 165 movie theatres across Canada.

“We believe this transaction today is both financially compelling and in our shareholders best interest,” Cineplex CEO Ellis Jacob said in a statement.

If the deal is approved by shareholders and regulators, Cineplex will become part of a global company listed on the London Stock Exchange.

The companies expect the transaction to close in the first half of 2020.

However, Cineplex has seven weeks to solicit and negotiate with other potential buyers who may be willing to pay more for the company.

Cineworld would receive a termination fee under certain circumstances including if Cineplex finds another buyer with a superior offer.

Cineplex has diversified in recent years into a variety of entertainment-related businesses including advertising, events programming and the Rec Room — a chain of locations serving food, drink and amusements.

This report by The Canadian Press was first published Dec. 16, 2019.

Companies in this story: (TSX:CGX)