Regal Entertainment pulls back on sale plans

Regal Entertainment Group, which operates the nation’s largest theater chain, is no longer looking for a buyer, the company said Thursday.

The Knoxville, Tenn.-based chain announced that its board of directors has “determined that a sale of the company would not be in the best interest of shareholders at this time,” according to a statement. “The board, consistent with its fiduciary duties, remains committed to evaluating any alternatives that would enhance shareholder value.”

Regal said it arrived at its decision after examining strategic alternatives with the advice of Morgan Stanley & Co.

The decision comes less than three months after Regal announced that it was exploring various options, including a sale of the chain. The timing surprised many analysts because it followed a sharp decline in box-office revenue last summer, causing a steep drop in earnings for Regal and other exhibitors.

Regal did not disclose the reasons for its decision, but the move comes at a challenging time for the U.S. theater business, which has struggled with long-term stagnation in attendance and growing competition from Netflix and other in-home entertainment options.

The last sale of a major theater company came in 2012 when China’s Dalian Wanda Group bought AMC, the nation’s second-largest chain, for $2.6 billion.

Regal operates 7,367 screens in 574 theaters in 42 states, including LA Live Stadium 14.

The company, which is controlled by Denver billionaire Phil Anschutz, said its board of directors had retained Morgan Stanley as its financial advisor in the review process.

Founded in 1989, Regal expanded rapidly, merging with the Edwards and United Artists chains before filing for bankruptcy protection from creditors in 2001.

Anschutz reorganized the company in 2002 as Regal continued to grow through acquisitions.

Until recently, Regal had been bulking up. In 2013, the company acquired 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 Theaters’ cinemas are in Texas, Missouri, Hawaii and Kansas.