People exit a Cineplex theatre in Toronto on Dec. 16, 2019.Christopher Katsarov/The Globe and Mail
Cineworld Group PLC’s $2.2-billion deal to acquire Canada’s largest movie theatre chain is one step closer to completion, following the end of a “go-shop” period that yielded no better offers for Cineplex Inc.
During the seven-week period that followed the announcement of the deal in December, Toronto-based Cineplex worked with financial adviser Bank of Nova Scotia to evaluate other offers. Scotiabank contacted 52 potential buyers, three of which signed confidentiality agreements in order to view information that is not public about the company. Cineplex announced on Monday that none of those potential buyers came forward with a superior offer.
Cineworld has offered $34 per share for Cineplex, which would give the British company the largest movie-theatre chain in North America; it also owns Regal Entertainment Group, which it acquired in 2018 for US$3.6-billion.
In Cineplex, Cineworld will acquire a company that has been attempting to diversify to cope with the ups and downs of the movie-theatre business. Cineplex has invested in entertainment complexes such as Rec Room and Playdium, and has a partnership with Dallas-based Topgolf Entertainment Group for a golf-related venue. It has a division that installs games in its own venues as well as supplying them to other companies. It has an investment in Seattle-based virtual-reality equipment maker VRStudios and has been installing its products in movie theatres and other venues such as Rec Room. And its media division sells not only ads on movie theatre screens but also installs digital media screens in fast-food restaurants and other locations.
“We see the exhibition side of the business as the core business,” Cineworld chief executive Mooky Greidinger said in an interview with The Globe and Mail in December. “... The diversified businesses are looking good, are looking healthy. ... It’s a good part of the business. We will take our decisions with regards to it.”
Cineworld already has plans for the theatre business. It hopes to build cinemas in new locations in Canada, and Cineworld plans to launch a subscription service that would charge a monthly fee for unlimited admission at Cineplex theatres, within about six months of the deal closing. (Subscribers would still pay extra for premium tickets such as 3-D, Imax and VIP.) The company’s Regal chain has offered a similar deal in the United States since July.
Movie theatres around the world have been challenged by expanding competition for people’s entertainment dollars. Companies such as Netflix, Amazon, Apple and Disney have all built on-demand streaming services that may convince users to stay home to watch some content rather than venturing to theatres.
“People that love movies will see a lot of movies − in the cinema, and also a lot of movies on streaming, and on their phone,” Mr. Greidinger said in December. “... But the premium place to watch a movie is in the cinema. It is a different, social event.”
The deal is expected to be completed in the first half of this year. Both Cineplex and Cineworld shareholders will vote on whether to approve the acquisition Feb.11.
“We have worked hard for over 17 years to deliver value to our shareholders and with the go-shop period finalized, we are confident that the proposed agreement with Cineworld Group will do just that,” Cineplex CEO Ellis Jacob said in a statement on Monday. “We are pleased to be moving our business forward as part of one of the world’s largest cinema companies and ensuring that Cineplex is part of the next era of global entertainment.”
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Susan Krashinsky Robertson