Cineworld targets US expansion with $3.6bn deal to buy Regal

Cineworld targets US expansion with $3.6bn deal to buy Regal
Britain’s Cineworld Group is buying larger US peer Regal Entertainment Group as movie theater operators battle competition from digital outlets such as Netflix. Above; Robin Wright as Claire Underwood in the Netflix drama House of Cards. (Reuters)
Updated 06 December 2017

Cineworld targets US expansion with $3.6bn deal to buy Regal

Cineworld targets US expansion with $3.6bn deal to buy Regal

LONDON: Britain’s Cineworld Group sealed an agreement to buy larger US peer Regal Entertainment Group on Tuesday for $3.6 billion in cash, a deal that would create the world’s second largest movie theater operator.
The takeover would put the combined company in a better position to take on industry leader AMC Entertainment Holdings Inc, and give it more scale to fight growing competition from Netflix Inc, Apple Inc. and other digital outlets.
Regal is three times larger than Cineworld by market value and the combined company would have about 9,542 screens, with 7,315 screens in the US.
Movie theaters have been struggling to win back viewers as competition from digital streaming platforms draws movie-goers away.
Cineworld CEO Mooky Greidinger brushed aside those concerns.
“When they go to the cinema, they go to the cinema and who loves to go to the cinema more than the Americans?,” Greidinger told Reuters.
Greidinger said he expects to boost margins and revenue at Regal, adding that Cineworld currently has margins of 22 percent, while Regal has margins of about 19.6-19.7 percent.
Rival AMC is majority owned by China’s Dalian Wanda Group, which has bought a slew of cinema assets around the world, including taking a controlling stake in US film studio Legendary Entertainment last year.
The approach by Cineworld was considered well-timed as shares in the US company have plunged more than 20 percent over the past year on concerns over stagnant admissions at theaters.
The deal value of $23 per Regal share represents a premium of about 12 percent to Regal’s closing price on Monday and implies an enterprise value — equity plus debt — of $5.8 billion.
Regal shares have risen 13.6 percent since Reuters first reported in November that Cineworld had approached Regal over a potential deal. Cineworld shares have fallen about 20 percent in the period.
Cineworld said it expected the deal to “strongly” add to earnings in the first full year following completion, currently expected in the first quarter of 2018.
The combined company is expected to deliver pre-tax benefits of $100 million, as well as additional annual benefits of $50 million, the companies said.
Cineworld said it expected to fund the deal through a rights issue to raise about $2.3 billion, with the rest provided by committed debt facilities and existing cash.
Cineworld expects to be able to maintain its existing dividend policy after the deal closes.
However, brokerage Peel Hunt cut its recommendation to “hold” from “add,” citing long-term concerns.
While the deal provided a step-change in profitability and cash flow for Cineworld, “the long-term investment proposition had fundamentally changed as a result of higher debt and earnings becoming heavily dominated by mature markets,” Peel Hunt analysts wrote.


Saudi PIF seeks investment flexibility with $5 billion-plus loan

Updated 04 December 2020

Saudi PIF seeks investment flexibility with $5 billion-plus loan

Saudi PIF seeks investment flexibility with $5 billion-plus loan
  • The loan finances are for use if and when the fund identifies investment opportunities 
  • PIF  is at the heart of the Kingdom’s strategy of economic diversification under its Vision 2030 reform plan

DUBAI: The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, is in talks with bankers to raise a loan of between $5 billion (SR18.75 billion) and $7 billion to provide flexibility in its investment strategy.

The PIF has declined to comment on reports of the loan, said to be in the form of a revolving facility from a number of international banks, but sources said it was part of the fund’s regular financing arrangements, which have seen it take out and repay facilities for the past two years.

The loan finances are for use if and when the fund identifies investment opportunities and may not necessarily be used.

The PIF has been opportunistic during the coronavirus pandemic in identifying what it saw as undervalued assets on global stock markets and has been an active trader in securities on international markets.

The fund invested $7 billion in mainly US stocks in the first quarter of the year, when markets were first impacted by pandemic lockdowns, and increased and diversified that in the second quarter. It scaled back its commitments in the third quarter when asset values were near all-time highs. In the summer, it spent $1.5 billion to acquire a stake in the Indian digital business Jio Platforms.

PIF, under governor Yasir Al-Rumayyan, is at the heart of the Kingdom’s strategy of economic diversification under its Vision 2030 reform plan, while simultaneously building an international portfolio of assets.

Earlier this year, PIF repaid a $10 billion syndicated loan ahead of schedule after it completed the sale of its stake in SABIC to Saudi Aramco, and in 2018 it raised an $11 billion term-loan facility from international banks.

Previous fundraisings were done in partnership with a group of 10 banks from the US, Europe, and Asia that form part of the fund’s “core banking relationships.”