UK's Cineworld buys Cinema City for £503m

Israel's Greidinger family, which controls Cinema City, will hold 24% of Cineworld, Europe's second largest cinema operator after the merger.

Britain's Cineworld Group plc (LSE: CINE) has acquired Cinema City International NV (WSE: CCI), controlled by the Greidinger family, at a company value of £503 million in cash and shares. The Greidinger family owns 54% of Cinema City International, through its 88% stake in Israel Theaters Ltd., and will therefore make a gross NIS 1.4 billion on the sale.

The Greidinger family opened its first cinema in Israel in 1929. "1929, the year of the Great Depression, was a great year for cinema. During a crisis, it's not a bad idea to go to the cinema for a couple of hours, and forget your troubles," says Cinema City International CEO Moshe Greidinger (61), the grandson of the company's founder.

The sale makes the Greidinger family, which is careful to stay out of the media's eye, one of Israel's wealthiest, and just as important, most liquid families. This is a title carried by few families in Israel nowadays, especially in the aftermath of the fall of business such as Nochi Dankner and Mordechay Zisser.

Cineworld is acquiring full ownership of Cinema City International operational subsidiary Cinema City Holding BV, at a company value of £503 million, on a debt and cash-free basis. Cinema City International has separate real estate operations, which are not part of the deal. Cineworld will pay £272 million in cash, and will issue shares for 24.9% of the merged company at a paper value of £231.4 million.

After the sale, Cinema City International will remain on the Warsaw Stock Exchange, under a new name, Global City, a real estate company with assets in Bulgaria, an office building in Herzliya and other properties in Israel, and land in Poland zoned for an amusement park. The company also owns 32.1% of real estate company Ronson Europe NV (WSE:RON), which has a market cap of $168 million. U. Dori Construction Ltd. (TASE: DRCN) also owns 32.1% of Ronson.

Cineworld will partly finance the acquisition through a £110 million rights issue, and bank loans.

Following the deal, Moshe Greidinger will become CEO of the merged company, which will keep the name Cineworld, and Israel Greidinger will become the COO. Cineworld chairman Anthony Bloom will continue in his post, but the Greindingers will hold the reins. The merged company will become Europe's second largest multiplex operator, with 1,852 screens at 201 mutliplexes, after Odeon UCI, which has 2,187 screens.

Although Cinema City International's roots are Israel, the country only accounts for a part of its business. It owns 11 multiplexes with 104 screens in Israel, under the Rav Chen and Yes Planet labels, 11% of the company's screens, compared with 33% of its screens in Poland, 18% in Hungary, and 15% in Romania. Nevertheless, the Israeli operations accounted for 23.4% of the company's revenue in January-September 2013, because of Israel's higher ticket prices, compared with 34.1% from its Polish operations, 15.3% from its Hungarian operations, and 10.1% from its Romanian operations.

The company plans to open an 18-screen multiplex in Beersheva and an 11-screen multiplex in Zichron Yaakov in 2014, and huge project in Jerusalem in 2015.

Published by Globes [online], Israel business news - - on January 12, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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