Regal Entertainment to Acquire Hollywood Theaters in $238 Million Deal
Movie-exhibition giant Regal Entertainment Group has agreed to acquire Hollywood Theaters in a deal worth around $238 million.
The deal will add 43 theaters with 513 screens to Regal’s portfolio. The theaters are located in 16 U.S. states and three U.S. territories.
With 6,880 screens in 540 locations, Regal is already the largest U.S. exhibition circuit. The purchase price consists of $191 million in cash, about $47 million in assumed lease obligations and "certain working capital," the company said without providing further details.
The cash portion includes repayment of approximately $157 million in debt held by the sellers.
“We expect the acquisition of Hollywood Theaters to be accretive to cash flows and earnings and are pleased to announce an agreement to purchase these high-quality assets,” said Regal CEO Amy Miles. “Accretive acquisitions are a key component of our overall business strategy and we look forward to a successful closing and integration of the Hollywood Theater assets during the second quarter."
Hollywood Theaters chairman and CEO Scott Wallace founded Wallace Theater Corp. in 1991 and acquired Hollywood Theaters in 1999.
"Regal Continues Industry Consolidation Trends with Accretive Deal and Solid Use of Cheap Capital," said B. Riley Caris analyst Eric Wold in the title of his first note following the deal news.
"This move represents a solid use of the inexpensive capital availability and reinforces the main rationale behind our upgrade to "buy" from "neutral" on Dec. 19 at $13.80," he wrote. "We continue to believe that Regal is well-positioned to once again generate results above expectations in 2013 driven by its leading industry position on a robust film slate (with higher 3D penetration) along with a well-capitalized balance sheet to take advantage of additional M&A opportunities"
He reiterated his rating and $17.50 price target on Regal's stock.
-The Hollywood Reporter