Regal Entertainment Group (RGC) has agreed to buy nine theaters
from AMC Entertainment Holdings Inc. in exchange for an undisclosed
amount of cash and two Regal theaters, whose location wasn't
announced.
The sale of the theaters in Chicago, Denver and Indianapolis are
needed for AMC to get Justice Department clearance to complete its
$275 million purchase of most locations run by smaller chain
Kerasotes Showplace Theatres. The department said Friday that the
divestiture was necessary to preserve competition for first-run
commercial movies in those cities.
Regal said Monday the acquisition would enhance its presence in
Illinois, Indiana and Colorado. It expects the acquisitions to
boost cash flow and earnings.
The deal comes as cinema operators have raised ticket prices
with the growing popularity of 3D films, which followed a
blockbuster year for domestic box offices as movies provided
cheaper entertainment for consumers during the economic downturn.
Still, Moody's Investors Service lowered its junk-level ratings on
Regal in April on the expectation it will continue to record
relatively insignificant levels of free cash flow.
Shares of Regal, the nation's largest theater chain, closed
Friday at $15.36 and were inactive premarket. The stock has gained
24% in the past year.
-By Matt Jarzemsky; Dow Jones Newswires; 212-416-2240,
matthew.jarzemsky@dowjones.com