Cineplex to acquire 26 Empire theatres for $200M
As Cineplex expands its presence into the Atlantic region, Empire gets out of the film exhibition biz by separately selling 20 theatres to Landmark Cinemas.
In a move to expand its national film exhibition presence to Atlantic Canada, Cineplex has entered into an agreement to purchase 26 theatres from Empire Theatres Limited for $200 million.
It was part of a larger maneuver that sees Empire closing the curtains on its film exhibition business.
The Cineplex purchase includes 24 Empire locations in Atlantic Canada, with 13 in Nova Scotia, six in New Brunswick, three in Newfoundland and two in P.E.I. The other two theatres are in Ontario’s Whitby and Kanata.
Empire, which is based in Stellarton, N.S., owned and operated 50 theatres across the country before Thursday’s deals, according to information on its website.
“This is a significant event for Cineplex, as the acquisition will provide our company with a truly national, coast-to-coast presence. This acquisition is an excellent strategic fit for Cineplex. It provides us with a presence in Atlantic Canada and it will enable us to leverage our existing businesses to maximize shareholder value,” said Cineplex president and CEO Ellis Jacob in a statement.
The purchase, which requires approval from the Competition Bureau, would bring the number of Cineplex screens to 218 across Canada.
The film exhibitor also said Thursday that it may add its proprietary UltraAVX, VIP Cinemas and XSCAPE Entertainment Centres to some of these locations.
Cineplex in February posted record earnings for Q4 of 2012, up 200% to $32.7 million, with theatre attendance reaching a new all-time high for the exhibitor.
Separately, Empire also reached an agreement with B.C.-based Landmark Cinemas to sell 20 of its theatres (179 screens) in Ontario and Western Canada for $55 million.
“The decision to sell the business of Empire Theatres was a very difficult one as it has a long history with our company and is a great business with excellent employees who have worked hard over many years to build an attractive entertainment destination,” said Empire president and CEO Paul D. Sobey in a statement.
“The decision, however, aligns with the strategic direction of the company to focus our resources on our food retail business through our 100% interest in Sobeys Inc. and on our related real estate investment through our 42.8% ownership interest in Crombie REIT,” he added.
The $55 million purchase price will be paid as $31 million in cash on closing, $19 million in equity, and an earn out right which management estimates has a potential value of approximately $5 million, according to a release. The deal is also subject to approval from the Competition Bureau.
From Playback Daily