Cineworld’s blockbuster £2.7bn Regal takeover deal attacked

One of the UK’s best-known asset managers is urging shareholders to vote down Cineworld’s reverse takeover of the Regal Entertainment Company.

Jupiter Asset Management’s Alastair Gunn is dead set against the deal, which would catapult the UK-listed cinemas group into the number two spot in the world behind Odeon owner AMC.

He said: “[Cineworld is] diluting all our growth to put a large amount of money into the most mature market in the world with tired assets.

“We are turning a dynamic business with a rock-solid balance sheet into one that is low growth and highly leveraged.”

Following the deal, Cineworld will operate in 10 countries across Europe and the US with over 9500 screens giving it significant negotiating power with the big Hollywood studios.

The takeover comes amid a wave of consolidation in cinemas, following years of falling audiences and the advent of streaming services like Netflix.

Cineworld will pay £2.7 billion for the US chain, or $23 a share, raising the money through a mammoth £1.7 billion rights issue. The shares plunged more than 20% last week when the deal was revealed.

Global City Holdings, the Greidinger family, which owns 28% of Cineworld has already said it will take up its full rights, with the backing of an unnamed sovereign wealth fund.

However, investors point out that the US owners of Regal want cash, which suggests they see no remaining upside for the business.