Shares in Cineworld today jumped 4% after it announced a merger with a Polish-listed rival that sees it become one of Europe’s biggest cinema chains.
It has sealed a £503 million cash and shares merger with Cinema City International, which owns nearly 100 multiplexes in seven countries, including Israel, Bulgaria, Czech Republic and Hungary.
Cineworld is paying CCI £272 million in cash, and has launched a £110 million rights issue to help fund the deal, which comes after Cineworld’s rivals Odeon & UCI and Vue Entertainment have already established their presence across Europe.
But some parts of the City were wary of Cineworld’s most ambitious acquisition. Panmure analyst Lindsey Kerrigan said: “we struggle to see the logic for the acquisition given management’s insistence on the substantial growth opportunities available in the UK.”
The deal also comes just seven weeks after Cineworld’s founder and chief executive, Steve Wiener, announced his departure after 18 years at the chain. That means the new boss of the combined group will be CCI’s current chief executive, Israeli Mooky Greidinger. Cineworld’s current finance director Philip Bowcock will remain in the post.
Cineworld was advised by Barclays and hired it plus JPMorgan and Investec to run the rights issue. The shares rose 15.8p to 407.8p.
