16 December 2019 – acquisition

The company has announced its intention to acquire Cineplex, the largest cinema operator in Canada, for C$34 per share in cash.  This implies an enterprise value for Cineplex of C$2.8bn (US$2.1bn).  The deal is expected to be double digit accretive to earnings and free cash flow in the first full year following completion.  This further increases the scale of operations and the company could soon be knocking on the door for promotion to the FTSE 100.  We see no reason to change our BUY rating.