Cineworld announced on Monday that it is set to acquire Cineplex in a $2.1 billion deal.
Shares in Cineworld (LON:CINE) were trading over 3% higher on Monday.
Cineplex is the largest cinema operator in Canada. It has a well-invested portfolio and a 75% box office market share.
The transaction will add 165 cinemas and 1,695 screens.
Earlier this year, Cineworld saw its full year profits soar, boosted by performance in the US.
“The Board of Cineworld believes that the acquisition of Cineplex is in the interests of its shareholders as it fits squarely within our strategic acquisition objectives and is expected to be strongly earnings and cash flow accretive,” Anthony Bloom, Chairman of Cineworld, said in a company statement.
“Going forward our immediate post-acquisition objectives will be to combine Cineplex with our US business to create a leading North American cinema operator; maximise the synergistic combination benefits of the Cineplex acquisition; continue the currently successful refurbishment of the Regal chain in the US; and focus strongly on a structured debt reduction program targeting leverage towards 3x net debt / EBITDA by the end of 2021,” the Chairman continued.
Mooky Greidinger, CEO of Cineworld, also provided a comment on the acquisition: “Cineplex is a great business. It is the number one cinema operator in Canada and is well positioned for further growth.”
“The combination of Cineplex and Regal will create the leading North American cinema operator with unrivalled scale and opportunity. By deploying our operational best practices, we expect the transaction to create compelling value for shareholders and to be strongly EPS and free cash flow accretive.”
“The acquisition of Cineplex strengthens our belief in the theatrical business, one of the most affordable out-of-home forms of entertainment. We constantly strive to provide the best customer experience and maintain technological leadership and we are excited about Cineworld’s prospects for 2020 and beyond as we look to complete the Cineplex transaction, our US refurbishment programme and the roll-out of Unlimited, and we look forward to the great selection of movies to come,” the CEO continued.
Shares in Cineworld Group plc (LON:CINE) were up on Monday, trading at +2.77% as of 16:19 GMT.