Cineworld Group Plc is about to make a deal, which is expected to result in creating the second-largest multiplex chain by market share in Europe. The company, which is the largest cinema group in the U.K., is about to acquire Cinema City International for 503 million pounds in cash and shares.
According to the terms of the deal, which will be financed by Cineworld via a 110-million-pound right issue and new debt financing, Cinema City International will get 272 million pounds in cash and a near 25% stake in the increased share capital of Cineworld, which is estimated to 231 million pounds. The deal will also create a chain with 201 cinemas and almost 2,000 screens.
The Chairman of Cineworld – Anthony Bloom, said: “International expansion has been on the strategic radar for a new years now.”
Less than two months ago, the founder and current Chief Executive Officer of Cineworld – Steve Wiener – officially announced he would leave the company in March 2014. The Israeli boss of Cinema City International is expected to become the new Chief Executive Officer of the Group after the merger.
During the lead of Steve Wiener, Cineworld became the largest operator in the U.K. thanks to Mr. Wieners efforts to open new cinemas and buy already existing ones. As a result, Cineworld has more than 100 screens in the country after acquiring Picturehouse in 2012. 25 New multiplexes are planned to be open by the chain by 2017. On the other hand, Cinema City International operates in emerging economies such as Poland, Bulgaria, Hungary and Romania.
The main current rivals of Cineworld are Vue entertainment and Guy Hands Odeon & UCI. They are both in a state of transition, because Vue Entertainment was bought for 935 million pounds in June, and Guy Hands Odeon & UCI was recently sold for more than 1 billion pounds.
According to the Financial Times, the current share price of Cineworld Group Plc is 7.91% up, and its one-year return rate is 56.67% up. The 8 analysts offering 12-month price targes for Cineworld Group Plc have a median target of 414.00, with a high estimate of 450.00 and a low estimate of 260.00. The median estimate represents a +5.61% increase from the last price of 392.00.
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