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No. 1 theater chain to form
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January 20, 1998: 8:41 a.m. ET
KKR, Hicks Muse to fold their assets into new company with Regal Cinemas
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NEW YORK (CNNfn) - Two leveraged-buyout firms will fold their movie-theater businesses into a new company and add a third, Regal Cinemas Cos., to the mix, creating the largest cinema chain in the world.
Hicks Muse Tate & Furst will join with Kohlberg Kravis Roberts & Co. to acquire Regal Cinemas for $31 a share, or $1.5 billion, plus the assumption of $290 million in debt.
Hicks Muse and KKR both recently entered the movie-theater business. In October, KKR agreed to pay $323 million, plus the assumption of $338 million in debt, to acquire Act III Cinemas from renowned producer Norman Lear. A month later, Hicks Muse agreed to acquire closely held United Artists Theatre Group for about $300 million, plus $550 million in debt.
Counting all the theater assets being folded into the new company, the transaction is expected to have a combined value of about $3 billion.
The deal catapults KKR/Hicks Muse past Carmike Cinemas Inc. and Loews Cineplex Entertainment to the top of the movie theater industry. With 5,347 in 727 locations in 35 states, the company will have an estimated 17 percent of the screens in the U.S. -- roughly twice the size of current industry leader, Carmike.
The three transactions will be financed in part by equity investments by KKR and Hicks Muse of about $600 million each, marking the first time Hicks Muse and KKR have made a joint investment.
Following the completion of the three-way combination of Act III, Regal Cinemas and United Artists Theatre Group, Hicks Muse and KKR will each own about 45 percent of the combined company, with the balance owned by the company's management and certain other investors.
The combined company will be led by Regal Chairman and Chief Executive Michael L. Campbell and a management team that will likely include senior executives from all three companies.
Completion of the Regal transaction and of the merger of Act III, Regal and United Artists Theatre Group are subject to expiration of the applicable Hart-Scott-Rodino waiting periods and other customary closing conditions. The Regal acquisition is also subject to approval by Regal shareholders.
-- from staff and wire reports
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Regal Cinemas
Act III
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