Cineworld Acquires Regal Entertainment for $3.6 Billion
Cineworld, a movie theater owner based in the United Kingdom, has acquired Regal Entertainment Group for $3.6 billion.
The merger makes Cineworld the second largest cinema operator on the planet, and it also means that foreign companies now own the two largest movie theater chains in the United States. AMC, the largest cinema operator in the US, is owned by Dalian Wanda, a Chinese conglomerate. With the acquisition, Cineworld will be able to access the American box office, the largest in the world. The company will have more than 9,500 screens in 10 countries. AMC and its subsidiary, Odeon, have 11,000 screens in Europe and the US.
The deal comes as streaming sites such as Netflix and Hulu continue to threaten the livelihood of movie theaters, due to easy access to films at home. Theater companies of a greater size could be a way to fight the competition. Just last year, Carmike Cinemas merged with AMC .
The deal also comes at a bit of a rough time for the American box office. Ticket sales in the US are down four percent from this time last year. Summer box office earnings in the US this summer were at their lowest in over two decades. Regal’s profit had dropped to $11 million from July 2017 to September 30, a 73 percent decline from the same time last year.
Reuters reported in November that Cineworld had approached Regal about a possible merger, and Regal shares have risen 13.6 percent since. On Tuesday, the day the merger was officially announced, Regal’s stock rose 6.7 percent in pre-market trading.
“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 theatre assets," Regal CEO Amy Miles said in a statement.
The agreement includes an option for Regal to entertain other offers until January 22. If Regal does not find another company to merge with, the agreement will be finalized in the first quarter of 2018.
Regal is also looking to compete with streaming businesses by charging more for tickets to popular movies than less popular ones.