Regal Entertainment Group, the second-largest theater chain in the U.S., has agreed to sell itself to British exhibitor Cineworld Group in a deal valuing Regal at $3.6 billion, the company said Tuesday.
Cineworld, Britain's biggest cinema operator, would pay $23 a share for Regal, which runs 561 theater locations. If the deal closes, it would turn Cineworld into one of the world's largest movie theater owners, putting it in a better position to compete with industry giant AMC Entertainment.
Cineworld's purchase of Regal would be the latest example of consolidation in the cinema business. Theater chains are combining as they face growing competition from at-home entertainment, including streaming services such as Netflix.
More size could help the combined company weather increasingly difficult conditions for theater chains, which have faced long-term declines in admissions and swift changes in consumer behavior.
U.S. cinema owners have struggled this year as multiple major films flopped. Ticket sales in the U.S. and Canada are down 4 percent from the comparable time last year, according to ComScore. The sluggishness, especially during the summer, has depressed theater stocks.
Regal's profit dropped to $11 million in the quarter ended Sept. 30, down 73 percent from the comparable quarter last year.
Theater chains including AMC and Regal have been investing in recliner seating,
Knoxville, Tenn.-based Regal, which is controlled by billionaire Philip Anschutz, said last week that the company was in talks to be acquired by Cineworld.
Under the agreement, Regal can seek and consider offers from other bidders until Jan. 22. Cineworld's offer price represents a 43 percent premium over Regal's 30-day average share price of $16.06, the company said. Anschutz Corp., which holds 67 percent of Regal's voting power, has agreed to support the deal.
