Cineworld, the UK’s largest cinema operator, is buying Polish-listed Cinema City International (CCI). The £500m cash and shares deal doubles the company’s number of cinemas, in an ambitious first step outside of the UK into eastern Europe and Israel.
The deal is being funded by a £110m rights issue and £272m cash, and will see CCI shareholders get 24.9% of the combined business.
CCI has 99 multiplexes with 966 screens in seven countries – Poland, Israel, Hungary, Czech Republic, Bulgaria, Romania and Slovakia. The ‘Enlarged Group’ (complete with all-important Capital Letters) will have 201 cinemas and 1,852 screens, and become the second-largest cinema business in Europe, Cineworld said in a statement.
Although the two companies have almost the same number of cinemas, CCI had revenues of €281m (£232m) in 2012 compared to Cineworld’s £359m.
While Cineworld is euphemistically calling the takeover a ‘combination’, the deal is actually quite equitable. Cineworld CEO and founder Steve Wiener announced in November that he will step down in March after 18 years at the helm. Convenient timing it turns out, as CCI CEO Mooky Greidinger is going to step in to take his place.
Cineworld Chairman Anthony Bloom gets to stay in the seat, as does CFO Philip Bowcock, while CCI CFO Israel Greidinger will become the new COO. The new Board will have six current Cineworld directors out of 10.
Cineworld is still trailing Europe’s biggest cinema group Odeon & UCI, which has 238 cinemas and 2,187 screens, mainly in the UK, Spain, Italy and Germany. But the deal means it leapfrogs Vue, which has 146 multiplexes and 1,300 screens in Europe and Taiwan after it acquired the second-biggest Polish cinema operator Multikino in October.
‘This is an exciting and unique opportunity for Cineworld,’ chairman Anthony Bloom said, adding that the deal will give the company ‘exposure to some of the most promising cinema markets in Europe.’ Clearly enough of us are foregoing buffering broadband for the silver screen.