British cinema operator Cineworld Group PLC will buy Poland-based Cinema City International NV's movie theater business for just over £500 million. This would double the number of Cineworld's cinemas to create the second largest chain in Europe.
According to Reuters, Cineworld said the deal would create a chain of 201 cinemas with 1,852 screens, lagging only private equity-owned Odeon & UCI Cinemas Group in Europe. Cineworld is the only listed cinema chain in UK.
The cash and share offer will leave Cinema City owning a quarter of Cineworld. Cineworld will be financing the purchase through a mix of shares, debt, and a £110 million rights issue. The British cinema chain said it would pay Cinema City £272 million in cash and the Polish cinema operator will hold 24.9% of its shares, the report stated.
Reuters, citing a statement by Cineworld, said that the deal was based on an enterprise value for Cinema City of £503 million ($828 million) on a debt-free and cash-free basis.
To help fund the purchase, Cineworld plans to sell 48 million shares in an 8-for-25 rights issue at 230 pence per share, the report said.
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