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UK's Cineworld to buy US Regal Entertainment for US$3.6 bln

[LONDON] Britain's Cineworld Group Plc has agreed to buy US movie theatre operator Regal Entertainment Group for US$3.6 billion in cash, the companies said on Tuesday.

A deal would put the combined company in a better position to take on US industry leader AMC Entertainment Holdings Inc , and also give it more scale to fight growing competition from Netflix Inc, Apple Inc and other digital outlets.

The deal value of US$23 per Regal share represents a premium of about 12 per cent to Regal's closing price on Monday and implies an enterprise value - equity plus debt - of US$5.8 billion.

Regal shares have risen 13.6 per cent since Reuters first reported in November that Cineworld had approached Regal over a potential deal.

Cineworld said it expected the deal to "strongly" add to earnings in the first full year following completion, currently expected in the first quarter of 2018.

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The combined company is expected to deliver pretax benefits of US$100 million, as well as additional annual benefits of US$50 million, the companies said.

Cineworld said it expected to fund the deal through a rights issue to raise about £1.7 billion(S$3.08 billion), with the rest provided by committed debt facilities and existing cash.

Cineworld also expects to be able to maintain its existing dividend policy after the deal closes.


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