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UK's Cineworld to buy Canada's Cineplex for C$2.15b

[LONDON] Britain's Cineworld Group plans to buy Canada's Cineplex for C$2.15 billion (S$2.22 billion), adding to a consolidation push across the movie-theatre industry as chains seek scale to defend against the threat of streaming.

Cineworld, which is based in London and derives almost three-quarters of its revenues from North America, will pay C$34 a share for Cineplex, according to a statement from the Toronto-based company on Monday. That's a 42 per cent premium to the Canadian company's closing price on Friday.

Cineworld shares reversed an early gain to fall as much as 7.8 per cent, the biggest intraday drop in almost six months.

Movie-theatre operators have been combining in a bet that greater efficiencies can counter the risk that on-demand services such as Netflix will hit attendance. Cineworld's takeover of Cineplex follows its US$3.6 billion purchase of American operator Regal Entertainment Group in 2018, targeted at broadening its growth opportunities beyond the UK and Ireland.

"Top theatre chains are gearing up for a challenging 2020 box-office year, as a weaker slate and surge in streaming services could mean another down year for the industry," Amine Bensaid, analyst at Bloomberg Intelligence, said in a research note last month.

Cineplex operates 165 movie theatres across Canada, and its purchase by Cineworld ensures the company "has access to the the global opportunities required to compete effectively in an evolving entertainment landscape," it said in the statement.

The deal will be funded by about US$2.3 billion of loans, according to the statement. Bank of America, HSBC Holdings and Goldman Sachs Group have committed to provide the financing.