Transaction Creates One of the World's Largest
Cinema Companies
Cineworld Group to Pay $34 in Cash for Each Cineplex Common Share,
Representing a Premium of 42% Over Cineplex's Closing Price on the
Toronto Stock Exchange on December 13,
2019
TORONTO, Dec. 16, 2019 /CNW/ - (TSX:CGX) –
Cineplex Inc., one of Canada's leading entertainment and media
companies, today announced that it has entered into a definitive
agreement (the 'Arrangement Agreement') with Cineworld Group, plc
(LSE: CINE) ('Cineworld Group'). With over 11,200
screensi around the globe, the proposed transaction will
create one of the world's largest cinema companies, providing
Cineplex with scale and all the benefits associated with a global
enterprise.
Cineworld Group will acquire all of the issued and outstanding
common shares (the 'shares') of Cineplex for $34 per share in cash, representing a premium of
42% to the closing price on the Toronto Stock Exchange (TSX) and a
premium of 39% to the volume weighted average share price on the
TSX for the 30 days ending December 13,
2019. The total transaction value is approximately
$2.8 billion including the assumption
of net debt.
"Since Cineplex went public in 2003, we have been committed to
delivering value to our shareholders. We believe this transaction
today is both financially compelling and in our shareholders best
interest," said Ellis Jacob,
President and CEO, Cineplex. "Cineworld Group shares our passion
for entertainment and mirrors our commitment to delivering
exceptional guest experiences through state-of-the-art technology.
The entertainment industry continues to transform and we are
pleased that through this agreement we are ensuring Cineplex is
part of the next era of global entertainment."
The transaction ensures that Cineplex's business, particularly
its network of 165 movie theatres across Canada, has access to the global opportunities
required to compete effectively in an evolving entertainment
landscape. Cineplex's long legacy of supporting the Canadian
entertainment industry and its partners in the arts, including
support for film festivals, programs and industry events across
Canada, will continue. The
transaction also creates a new partner for the Canadian film
industry to collaborate with, as Cineworld Group has extensive
distribution and exhibition businesses outside of Canada.
Transaction Details
The transaction will be
implemented by way of statutory plan of arrangement under the
Business Corporations Act (Ontario). The implementation of the
transaction is subject to shareholder approval at a special meeting
of Cineplex shareholders by two-thirds of the votes cast by
holders of shares in person or by proxy at the meeting, as well as
a meeting of Cineworld Group shareholders by simple majority
vote. Cineworld Group's largest shareholder, which owns
approximately 28% of Cineworld Group's outstanding ordinary shares,
has agreed to vote in favour of the transaction at Cineworld
Group's meeting of shareholders. The transaction is
subject to customary closing conditions including regulatory
approvals.
The transaction is expected to close during the first half of
2020. The Arrangement Agreement includes a 7 week go-shop period,
which permits Cineplex, with the assistance of its financial
advisor, to actively solicit, evaluate and enter into negotiations
with third parties that express an interest in acquiring Cineplex.
The go-shop period expires on February 2,
2020. There can be no assurance that this process will
result in a superior proposal. Cineplex does not intend to disclose
developments with respect to the go-shop process unless and until
the Cineplex board of directors makes a determination requiring
further disclosure.
The Arrangement Agreement provides for non-solicitation
covenants on the part of Cineplex and Cineworld Group, subject to
customary 'fiduciary out' provisions.
A termination fee is payable to Cineworld Group in certain
circumstances, including if Cineplex fails to complete the
transaction following receipt of a superior proposal. A termination
fee is payable to Cineplex in certain circumstances, including if
Cineworld Group fails to obtain the required shareholder approval
of its shareholders.
Cineplex intends to continue paying its normal monthly dividends
in the ordinary course through the payment which would be due on
February 28, 2020 consistent with
past practice. After such time, Cineplex does not intend to declare
any further dividends.
The foregoing summary is qualified in its entirety by the
provisions of the Arrangement Agreement, a copy of which will be
filed on SEDAR at www.sedar.com. Cineplex will mail a Management
Information Circular to its shareholders in connection with the
special meeting to consider and vote on the transaction, copies of
which will also be filed on SEDAR at www.sedar.com.
Fairness Opinion and Cineplex Board of Directors
Recommendation
Cineplex's board of directors, in
consultation with its financial and legal advisors, has determined
that the transaction is in the best interest of Cineplex and is
fair to shareholders and unanimously recommends that shareholders
vote in favour of the transaction. Cineplex directors and senior
officers have entered into voting support agreements with Cineworld
Group pursuant to which, among other things, they have agreed to
vote all of the shares owned or controlled by them in favour of the
arrangement. Scotiabank has provided its opinion to the board that
the consideration to be received by Cineplex shareholders pursuant
to the agreement is fair from a financial point-of-view.
Advisors
Scotiabank is acting as Cineplex's exclusive
financial advisor and its legal advisors are Goodmans LLP
(Canada), Herbert Smith Freehills
LLP (U.K.) and Baker & McKenzie (U.S.).
About Cineplex
Cineplex (TSX:CGX) is a top-tier
Canadian brand that operates in the Film Entertainment and Content,
Amusement and Leisure, and Media sectors. A leading entertainment
and media company, Cineplex welcomes over 70 million guests
annually through its circuit of theatres and location based
entertainment venues across the country. In addition to being
Canada's largest and most
innovative film exhibitor, Cineplex also operates successful
businesses in digital commerce (CineplexStore.com), food service,
alternative programming (Cineplex Events), cinema media (Cineplex
Media), digital place-based media (Cineplex Digital Media),
amusement solutions (Player One Amusement Group) and an online
esports platform for competitive and passionate gamers (WorldGaming
Network). Additionally, Cineplex operates location based
entertainment complexes specially designed for teens and families
(Playdium) as well as Canada's
favourite destination for 'Eats & Entertainment' (The Rec
Room), and will be opening exciting new sports and entertainment
venues across Canada (Topgolf).
Cineplex is a joint venture partner in SCENE, Canada's largest entertainment loyalty
program.
Proudly recognized as having one of the country's Most Admired
Corporate Cultures, Cineplex employs approximately 13,000
people in its offices across Canada and the United States. To learn
more visit Cineplex.com or download the Cineplex App.
About Cineworld Group
Cineworld Group plc was founded
in 1995 and listed its shares on the London Stock Exchange in
May 2007. The company has grown
through expansion and by acquisition to become the second largest
cinema chain worldwide, holding the number one or number two
position by number of screens in each of its regions. As of
1 December 2019, Cineworld operated
9,498 screens across 786 sites in the US, UK, Ireland, Poland, the Czech
Republic, Slovakia,
Hungary, Bulgaria, Romania and Israel.
Caution Regarding Forward-Looking Statements
Certain
information included in this news release contains forward-looking
statements within the meaning of applicable securities laws. These
forward-looking statements include, among others, statements with
respect to: the anticipated benefits of the transaction; the timing
and anticipated receipt of required regulatory approvals and the
anticipated timing for closing the transaction. The words "may,"
"will," "could," "should," "would," "suspect," "outlook,"
"believe," "plan," "anticipate," "estimate," "expect," "intend,"
"forecast," "objective" and "continue" (or the negative thereof),
and words and expressions of similar import, are intended to
identify forward-looking statements.
By their very nature, forward-looking statements are subject to
numerous risks and uncertainties, some of which are beyond
Cineplex's control. The forward-looking statements contained in
this news release are based on certain key expectations and
assumptions made by Cineplex, including expectations and
assumptions concerning the anticipated benefits of the Transaction
and the receipt, in a timely manner, of regulatory, shareholder and
court approvals in respect of the Transaction.
Forward-looking statements are subject to various risks and
uncertainties which could cause actual results and experience to
differ materially from the anticipated results or expectations
expressed in this news release. The key risks and uncertainties
include, but are not limited to: general global economic, market
and business conditions; governmental and regulatory requirements
and actions by governmental authorities; relationships with
employees, customers, business partners and competitors; and
diversion of management time on the Transaction. There are also
risks that are inherent in the nature of the Transaction, including
failure to satisfy the conditions to the completion of the
Transaction and failure to obtain any required regulatory and other
approvals (or to do so in a timely manner). The anticipated
timeline for completion of the Transaction may change for a number
of reasons, including the inability to secure necessary regulatory,
court or other approvals in the time assumed or the need for
additional time to satisfy the conditions to the completion of the
Transaction. As a result of the foregoing, readers are cautioned
not to place undue reliance on the forward-looking statements
contained in this news release concerning the timing of the
Transaction.
Cineplex does not undertake to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
Canadian securities law. When reviewing Cineplex's forward-looking
statements, readers should carefully consider the foregoing factors
and other uncertainties and potential events. A comprehensive
discussion of other risks that impact Cineplex can also be found in
Cineplex's public filings which are available under Cineplex's
profile on SEDAR at www.sedar.com.
_________________________________
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iBased on
the combined screen count of Cineplex and Cineworld Group as of
December 31, 2018
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SOURCE Cineplex