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Regal Entertainment (RGC) Agrees To Buy Hollywood Theaters

 February 19, 2013 12:23 PM


(By Balaseshan) Regal Entertainment Group (NYSE: RGC), which operates as a motion picture exhibitor, said it has agreed to purchase Hollywood Theaters for total price of $238 million.

The Knoxville, Tennessee-based Regal said it expects the acquisition to add to cash flows and earnings.

The purchase price will consist of $191 million in cash, about $47 million of assumed lease obligations, comprised of capital leases and financing obligations, and certain working capital. The cash portion includes repayment of about $157 million of the sellers' debt.

In 1991, Hollywood Theaters' current chairman and CEO Scott Wallace founded Wallace Theater Corp. and in 1999 purchased Hollywood Theaters Inc., which operated 73 theaters with 502 screens.

[Related -A Serious Red Flag]

The proposed acquisition would add a total of 43 theatres with 513 screens to Regal's portfolio at a pre-synergy multiple of about 5.9 times cash flow and includes theatres in 16 states and 3 U.S. territories, Regal noted.

"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," said Amy Miles, CEO of Regal.

Regal's theatre circuit, comprising Regal Cinemas, United Artists Theatres and Edwards Theatres, operates 6,880 screens in 540 locations in 38 states and the District of Columbia. Regal operates theatres in 43 of the top 50 U.S. designated market areas.

On February 7, Regal reported a fourth-quarter earnings of $37.3 million or $0.24 per share, higher than last year's $4.1 million or $0.03 per share. Total revenue grew 17.8% to $723.1 million.

[Related -The Market Throws Double Red Flags]

RGC is trading up 3.59% at $15.88 on Tuesday. The stock has been trading between $12.74 and $16.30 for the past 52 weeks.

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