Shares of Regal Entertainment gained modestly Tuesday after the nation's largest theater chain announced it had reached a deal to acquire Hollywood Theaters.
Regal Entertainment Group said it has entered into an agreement to buy Hollywood Theaters, a Portland, Ore., chain that operates 43 theaters in 16 states, for $191 million in cash and about $47 million of assumed lease obligations. Most of Hollywood's cinemas are concentrated in Texas, Missouri, Hawaii and Kansas.
Investors responded favorably to the news. Regal shares closed up 3% at $15.83. Shares have climbed 9% this year for Regal, based in Knoxville, Tenn.
“Regal is well-positioned to once again generate results above expectations in 2013 driven by its leading industry position on a robust film slate,” Eric Wold, an analyst with B. Riley Caris in San Francisco, said today in a research note.
The acquisition, subject to regulatory approval, would add 513 screens to Regal's portfolio, which includes 6,880 screens in 540 locations.
The Hollywood Theaters deal will add to the company's cash flow, Regal Chief Executive Amy Miles said in a statement. Such acquisitions are "a key component of our overall business strategy and we look forward to a successful closing and integration of the Hollywood Theater assets during the second quarter," Miles added.
The deal is the latest in a string of consolidations in the U.S. exhibition industry. Cinemark USA Inc., the nation's third largest theater chain, announced in November that it was acquiring Rave Cinemas, the Dallas chain that operates the former Bridge theater in Los Angeles, for $240 million.
Carmike Cinemas, the Columbus, Ga., chain, said it had already signed an agreement to buy 16 theaters with 251 screens from Rave for $19 million in cash and $100.4 million of assumed lease obligations.
China's Dalian Wanda Group last year acquired AMC Entertainment, the nation's second-largest theater chain, for $2.6 billion.