MCA Acquires 50% Interest in Cineplex

MCA said Monday that it has acquired 50% of Cineplex Odeon Corp. in a stock transaction worth about $159 million. MCA, which had agreed last January to acquire 33% of the Toronto-based motion picture exhibitor, said it decided to accelerate the deal’s closing and also to exercise its option to acquire up to 50%.

The Los Angeles-based entertainment company also disclosed that, in a separate transaction, it had agreed to issue 308,847 shares of MCA stock to its record division chief, Irving Azoff, to acquire his interests in three entertainment-related firms. The stock would be worth $15.67 million based on Monday’s closing price of $50.75 for MCA shares on the New York Stock Exchange.

In addition to Azoff, four other individuals will receive a total of 176,922 MCA shares for their ownership interests in Front Line Management, Full Moon Records or Facilities Merchandising Inc. Including the stock being paid to Azoff, MCA is issuing a total of 485,769 shares worth about $24.7 million for the companies.

Document at SEC

MCA announced last week that it would acquire all of the stock of the three companies, but it declined to disclose the price. The information surfaced Monday in a document filed at the Securities and Exchange Commission.

In the Cineplex deal, MCA agreed to issue a total of 3.13 million shares in exchange for a 50% stake in the theater chain. Cineplex, in turn, sold 1.54 million of the MCA shares to an underwriting group, raising $106.65 million.

With that cash infusion, Cineplex Odeon said it intends to pursue new acquisitions. The 8-year-old company has been moving aggressively to snap up regional theater chains around the United States.

On Monday, for example, Cineplex said it completed the purchase of 13 theaters in the Chicago area from Essaness Theatres Corp. for $14.35 million.

Although MCA owns a 50% interest in Cineplex, its voting rights are restricted by Canadian law to slightly less than one-third of all issued Cineplex shares.

In a prepared statement, MCA President Sidney J. Sheinberg said he believes that the investment in Cineplex “will have a positive impact on MCA’s earnings per share,” and predicted that the exhibitor will see a “significant increase in its earnings as well.”