Shares in Cineworld (LSE: CINE) rose by more than 5% in early trade this morning, following news of a £900m merger that will give it an entry point into Europe.
Poland-based Cinema City International operates in seven countries across Eastern, Central Europe as well as Israel, and the tie-up will create the second largest cinema business in Europe: the combined business will number 201 sites and 1,852 fully digital screens.
Cinema City has been valued at around £503m, and Cineworld announced that the transaction will be part-funded through a 8-for-25 rights issue of up to 47,965,465 rights issue shares at 230p per new ordinary share to raise around £110m.
The merged group will consist of management from both sides: Cineworld chairman Anthony Bloom will continue in the role for the new company, while Cinema City’s CEO Mooky Greidinger will take the role of chief executive officer. Cineworld’s Philip Bowcock will remain as chief financial officer, while Cinema City’s CFO Israel Greidinger will be appointed as chief operating officer.
Mr Bloom commented:
“This is an exciting and unique opportunity for Cineworld to offer shareholders enhanced growth prospects and attractive returns via exposure to some of the most promising cinema markets in Europe. Cinema City is an extremely well-run and dynamic business, which creates a platform for further growth in future.”
