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Singapore on set with Cineworld’s £2.7bn deal

Cineworld has been on a buying spree to drive its growth ambitions

By Mark Kleinman, City Editor

A state-owned Singaporean fund is to become a shareholder in the London-listed cinema group Cineworld as part of a £2.7bn takeover of Regal, a US rival.

Sky News has learnt that the Asian city state's Government Investment Corporation (GIC) will participate in a £1.7bn rights issue being arranged to help fund the deal, which will be one of the largest foreign takeovers by a British company this year.

Cineworld disclosed on Tuesday morning that a sovereign wealth fund would invest alongside the Greidinger family, the company's biggest shareholder, as part of the fundraising, but did not disclose its identity.

Sources said that GIC was likely to invest in excess of £200m in the rights issue.

The Cineworld deal will be the latest in a string of UK-based companies in which GIC or its sister Singaporean state entity, Temasek Holdings, have invested.

GIC holds big stakes in enterprises including the RAC breakdown recovery service, Oaknorth, a challenger bank, and Mergermarket, a business information service.

If approved by shareholders, the tie-up with Regal will see Cineworld gain a strong presence in the US market.

It said the deal would create the second-largest cinema operator by screen numbers, with almost 10,000 between them currently across 10 countries.

The US has the largest box office takings worldwide and Regal Entertainment Group has 7,315 screens in 561 theatres – the vast majority of which are in the US.

In addition to the rights issue, Cineworld said it planned to fund the purchase by raising a further £3bn through the refinancing of existing debt.

It added that it would look to make some savings across the enlarged group worth £112m which would include the closure of some screens, although it declined to say where.

Regal said the offer price, agreed unanimously by its board, represented a premium of 43.2% over its 30-day unaffected weighted average share price.

Investors in Cineworld responded cautiously to the news, sending the shares 0.5% lower on Tuesday as they digested news of the proposed rights issue.

The British company's chief executive, Mooky Greidinger, said it was in the process of engaging with shareholders.

He said: "Regal is a great business and provides Cineworld with the optimal platform on which we can continue our growth strategy.

"Both companies are strongly committed to bringing a high-end cinematic experience to their customers.

"Consolidation is an important move forward and the best practice we have successfully rolled out across Europe will be the key driver to continued success."

His counterpart at Regal, Amy Miles, said: "We are excited to have reached an agreement with Cineworld, at a price that represents a meaningful premium on Regal's unaffected share price for our shareholders.

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"Since becoming a public company, Regal has focused on delivering superior shareholder value, including return of capital in the form of regular and special dividends.

"We believe the transaction announced today provides compelling value for our stockholders."

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