Cineworld raises the curtain on £2.7bn takeover of US chain Regal
Cineworld has agreed a blockbuster £2.7 billion deal to buy US chain Regal in a move that will create the second biggest cinema group in the world.
The combined group will have more than 9,500 screens across 10 countries and will see Cineworld enter the lucrative US market.
Cineworld, which confirmed the takeover talks last week, has agreed to pay $23 a share for Regal, which it will fund largely through a mammoth £1.7 billion investor cash-call.
Mooky Greidinger, chief executive of Cineworld, told the Press Association the deal is a "very big step forward" for the group.
"We have said through the years that part of out target is to increase our international footprint and moving into the US is a huge opportunity for us," he said.
He added there would be a small number of screens that would close following the deal as part of plans to make annual savings of up to $150 million (£112 million).
He stressed it would be a "very minor" number of screens that would be shut, with plans also to invest in refurbishment.
But shares in Cineworld fell another 3%, having plummeted by nearly 20% last Wednesday when it confirmed talks and unveiled the rights issue plans.
Mr Greidinger said details of the deal had been leaked a week ahead of time and "caught a lot of people by surprise".
He said Cineworld has since been talking to major investors about the deal and "will continue to do so" as it looks to get backing for the rights issue and approval for the deal in February.
Regal directors and its biggest shareholder, the Anschutz Corporation, have given their recommendation for the acquisition, which is classed as a reverse takeover.
The deal will see the combination of Europe's second-largest cinema group with the second-largest chain in the US.
It will give Cineworld access to the US market, which has the largest box office market in the world, worth more than $10 billion (£7.5 billion) a year.
The tie-up will also give the combined group greater might to compete with industry leader AMC Entertainment, which last year snapped up Odeon & UCI Cinemas Group in Europe.
The wave of consolidation in the sector has also seen rival Vue recently consider a possible sale, with reports that it has been approached by Korean firm CJ-CGV.
Cineworld has 2,227 screens across 232 sites and also owns the Picturehouse Cinemas chain.
Regal has 561 cinemas and 7,315 screens.
The deal is expected to complete by the end of March.
Analysts at Peel Hunt said Cineworld was buying into a "very mature market" and said the scale of the rights issue would naturally cause investor "indigestion".
The US cinema sector has struggled this year due to a series of box office flops, such as Justice League.
Cineworld has fared better in recent months thanks to the success of Dunkirk and Despicable Me 3, while it also opened a string of new sites.
But major players on both sides of the Atlantic are hoping for a year-end boost from a strong slate of upcoming films, including Star Wars: The Last Jedi.