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Cineplex Inc
Symbol CGX
Shares Issued 63,333,238
Close 2019-12-13 C$ 24.01
Recent Sedar Documents

Cineplex to be acquired by Cineworld for $2.8B

2019-12-16 06:13 ET - News Release

Mr. Ellis Jacob reports

CINEPLEX SIGNS DEFINITIVE AGREEMENT TO BE ACQUIRED BY CINEWORLD GROUP

Cineplex Inc. has entered into a definitive agreement with Cineworld Group PLC. With over 11,200 screens around the globe, the proposed transaction will create one of the world's largest cinema companies, providing Cineplex with scale and all the benefits associated with a global enterprise.

Cineworld Group will acquire all of the issued and outstanding common shares of Cineplex for $34 per share in cash, representing a premium of 42 per cent to the closing price on the Toronto Stock Exchange and a premium of 39 per cent to the volume-weighted average share price on the Toronto Stock Exchange for the 30 days ending Dec. 13, 2019. The total transaction value is approximately $2.8-billion including the assumption of net debt.

"Since Cineplex went public in 2003, we have been committed to delivering value to our shareholders. We believe this transaction today is both financially compelling and in our shareholders best interest," said Ellis Jacob, president and chief executive officer, Cineplex. "Cineworld Group shares our passion for entertainment and mirrors our commitment to delivering exceptional guest experiences through state-of-the-art technology. The entertainment industry continues to transform and we are pleased that through this agreement we are ensuring Cineplex is part of the next era of global entertainment."

The transaction ensures that Cineplex's business, particularly its network of 165 movie theatres across Canada, has access to the global opportunities required to compete effectively in an evolving entertainment landscape. Cineplex's long legacy of supporting the Canadian entertainment industry and its partners in the arts, including support for film festivals, programs and industry events across Canada, will continue. The transaction also creates a new partner for the Canadian film industry to collaborate with, as Cineworld Group has extensive distribution and exhibition businesses outside of Canada.

Transaction details

The transaction will be implemented by way of statutory plan of arrangement under the Business Corporations Act (Ontario). The implementation of the transaction is subject to shareholder approval at a special meeting of Cineplex shareholders by two-thirds of the votes cast by holders of shares in person or by proxy at the meeting, as well as a meeting of Cineworld Group shareholders by simple majority vote. Cineworld Group's largest shareholder, which owns approximately 28 per cent of Cineworld Group's outstanding ordinary shares, has agreed to vote in favour of the transaction at Cineworld Group's meeting of shareholders. The transaction is subject to customary closing conditions including regulatory approvals.

The transaction is expected to close during the first half of 2020. The arrangement agreement includes a seven-week go-shop period, which permits Cineplex, with the assistance of its financial adviser, to actively solicit, evaluate and enter into negotiations with third parties that express an interest in acquiring Cineplex. The go-shop period expires on Feb. 2, 2020. There can be no assurance that this process will result in a superior proposal. Cineplex does not intend to disclose developments with respect to the go-shop process unless and until the Cineplex board of directors makes a determination requiring further disclosure.

The arrangement agreement provides for non-solicitation covenants on the part of Cineplex and Cineworld Group, subject to customary fiduciary out provisions.

A termination fee is payable to Cineworld Group in certain circumstances, including if Cineplex fails to complete the transaction following receipt of a superior proposal. A termination fee is payable to Cineplex in certain circumstances, including if Cineworld Group fails to obtain the required shareholder approval of its shareholders.

Cineplex intends to continue paying its normal monthly dividends in the ordinary course through the payment which would be due on Feb. 28, 2020, consistent with past practice. After such time, Cineplex does not intend to declare any further dividends.

The foregoing summary is qualified in its entirety by the provisions of the arrangement agreement, a copy of which will be filed on SEDAR. Cineplex will mail a management information circular to its shareholders in connection with the special meeting to consider and vote on the transaction, copies of which will also be filed on SEDAR.

Fairness opinion and Cineplex board of directors recommendation

Cineplex's board of directors, in consultation with its financial and legal advisers, has determined that the transaction is in the best interest of Cineplex and is fair to shareholders and unanimously recommends that shareholders vote in favour of the transaction. Cineplex directors and senior officers have entered into voting support agreements with Cineworld Group pursuant to which, among other things, they have agreed to vote all of the shares owned or controlled by them in favour of the arrangement. Scotiabank has provided its opinion to the board that the consideration to be received by Cineplex shareholders pursuant to the agreement is fair from a financial point of view.

Advisers

Scotiabank is acting as Cineplex's exclusive financial adviser and its legal advisers are Goodmans LLP (Canada), Herbert Smith Freehills LLP (U.K.) and Baker & McKenzie (U.S.).

About Cineplex Inc.

Cineplex is a top-tier Canadian brand that operates in the film entertainment and content, amusement and leisure, and media sectors. A leading entertainment and media company, Cineplex welcomes over 70 million guests annually through its circuit of theatres and location-based entertainment venues across the country.

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