Hicks, Muse and KKR team up to buy Regal Cinemas Deal will form world's largest theater chain

The movies

January 21, 1998|By BLOOMBERG NEWS

NEW YORK -- Hicks, Muse, Tate & Furst Inc. and Kohlberg Kravis Roberts & Co. agreed yesterday to buy Regal Cinemas Inc. for $1.5 billion and combine their other theater chains, creating the world's largest operator of movie theaters.

The investment firms will purchase Regal for $31 a share, or $1.2 billion in cash, and take on $290 million in debt.

Regal will be folded into KKR's Act III Cinemas and Hicks Muse's United Artists Theatre Group, together valued at $1.5 billion. It's the first time the rival firms have joined for an investment.

The new company will have twice as many screens as industry leader Carmike Cinemas Inc. The buyout firms, which had been bidding against each other for chains, will be able to use their combined clout to make even more purchases in the fast-consolidating industry.

Regal's shares fell 81.25 cents to $29.4375 in trading of 11.3 million, 22 times its three-month daily average.

Dallas-based Hicks Muse and New York-based KKR, two of the largest buyout firms, will each own 45 percent of the combined company. The rest will be owned by management and investors. The company, which hasn't been named, will have $1.7 billion in debt.

The combined chain will have 5,347 screens in 727 theaters in 35 states, giving it about 17 percent of the nation's screens.

The company will be led by Regal Chairman and Chief Executive Michael Campbell and a management team that will likely include senior executives from all three theater chains.

Hicks Muse and KKR will each contribute about $600 million of equity in the transaction.

KKR, the biggest acquisition firm, bought producer Norman Lear's Act III chain for $660 million last month. Hicks Muse in November agreed to buy United Artists for about $850 million.

Pub Date: 1/21/98

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