Cineplex Inc. won’t be changing its name, but the theatre chain will probably see some job losses, the company’s likely new owner says.
Cineworld PLC chief executive Moshe (Mooky) Greidinger said in an interview with The Canadian Press that he expects he’ll have to shake up some elements of the Toronto-based company that he has made a $2.8-billion takeover bid for, but working out the exact details will take time.
“The majority of the employees of Cineplex will stay,” he said, when asked about potential cuts to Cineplex’s workforce of about 12,000 employees.
“There will be some redundancies and there might be some changes on the other side of the globe…but we need to look at it and see what we need to do.”
Though he’s still mulling staffing, Greidinger said he has already made up his mind about the company’s branding and name.
“Cineplex will be Cineplex,” he said. “It has got a lot of love – that’s a big word – and respect from customers and a great reputation, so there is no need to change it.”
His remarks came a day after Cineplex shareholders overwhelmingly approved the Cineworld takeover deal announced in early December.
Through the deal, Cineworld agreed to assume Cineplex’s debt and pay $34 per share in cash, amounting to a 42 per cent premium on its closing price at the time of the announcement.
The deal had a go-shop period allowing Cineplex to entertain other offers. Cineplex said in early February that 52 potential buyers were contacted, three of which entered into confidentiality agreements, but the company did not receive a superior bid during the period.
Cineplex chief executive Ellis Jacob called the go-shop process “robust” and said Wednesday the $34 price is “very fair” and a total “that the other parties weren’t able to go beyond.”
“As the entertainment industry continues to transform, the pending transaction shows that Cineplex is part of the next era of global entertainment,” Jacob said. “It means that our business, particularly our network of 155 movie theatres across Canada, has access to global opportunities in an evolving entertainment landscape.”
Jacob has not said whether he will be part of Cineplex’s future, but said the company intends to apply for a final order from the Ontario Superior Court of Justice to approve the transaction next Tuesday. He expects the deal to close between Mar. 23 and June 30, after which time the company’s shares will be delisted from the Toronto Stock Exchange.
The deal expands Cineworld’s empire.
The company bought U.S.-based Regal Entertainment Group roughly two years ago and owns 9,498 screens across 786 sites in the U.S., U.K., Ireland, Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania and Israel, but Cineplex adds 165 Canadian theatres and 1,695 screens to that count.
Greidinger and Jacob made their comments as Cineplex reported fewer theatregoers heading to the movies and costs related to the transaction hampered its fourth-quarter profits.
The company said Wednesday it earned $3.5 million or six cents per diluted share for the quarter ended Dec. 31 compared with a profit of $27.2 million or 43 cents per share in the same quarter a year earlier.
Meanwhile, its attendance dipped by 4.2 per cent to 66.4 million from 69.3 million in the quarter before. Such declines are a persistent issue in the theatre business, which is facing an increasing fight for audience attention given the growth of streaming services.
But the numbers didn’t worry Greidinger.
“One of the characteristics of our industry is that you are as good as your next picture. Some movies are surprising in a big way and good and some movies here and there are underperforming,” he said.
To combat dwindling attendance, Cineplex has widened its concession stand offerings and raised its prices. It has also invested in a handful of entertainment and dining complexes like the Rec Room, Playdium and forthcoming Junxion concept.
Greidinger is evaluating what to do with those businesses, as well as Top Golf – a virtual reality golfing concept Cineplex is due to bring to Canada.
He has said he would introduce a movie ticket subscription service to Canada within six months of the deal closing. Regal theatres already offer the service, charging customers about $18 a month for unlimited movie tickets.
He has also expressed an interest in opening more theatres using Screen X, which involves a 270-degree screen, and CJ 4DPLEX, an immersive cinema concept that uses motion, wind, fog, rain, lighting, snow, bubbles, vibration and scent.