Empire Company, the owner of Sobeys supermarket chains, is reportedly planning to sell away 46 of its theaters to Cineplex Inc. and Landmark Inc. for around $243 million, thus exiting the movie business. The deal comes as a move to focus on its retail chain, according to several media reports.
Empire will be paying off debts with the proceeds of the sale. The 46 theaters are scattered across Western Canada, Atlantic and Ontario. Cineplex will be taking over 24 theaters, of which two are in Ontario and two on Prince Edward Island. It will also acquire six theaters in New Brunswick, three in Newfoundland and Labrador and 13 in Nova Scotia. Landmark Inc's acquisition portfolio will include 20 theaters across Western Canada and Ontario, reports Globe and Mail.
While Cineplex will be paying something around $190.7 million for the share, Landmark Inc has agreed to take over the theaters for $52.4 million. According to CTV News, Empire will still have four theaters left, which it plans to sell individually or close them down, once their leases are completed by December 2013.
"The decision, as difficult as it has been, aligns with the strategic direction of the company to focus our resources on our food retailing businesses," Paul Sobey, Chief Executive and President of Empire, said in a statement.
Empire's massive downsizing comes a few weeks after it agreed to purchase Safeway Inc's Canadian grocery stores for around $5.53 billion. Moreover, in its fourth quarter earnings, Empire's Sobeys revenue went up 6 percent and profits jumped 17 percent. Considering the commendable performance of the company, focusing on retailing is definitely a wise option.
Meanwhile, the theater acquisition will grant Cineplex 78 percent of the theater market share in Canada, making it the largest movie business operators. Apparently, the deal is a perfect "strategic fit" for Cineplex, reports the Financial Post.
"This is a significant event for Cineplex, as the acquisition will provide our company with a truly national, coast-to-coast presence," Ellis Jacob, CEO of Cineplex said to Bloomberg.
The transaction will also make Landmark the second largest market share holder in Canada. The company will once again be returning to the once-vacated markets in Edmonton and Calgary.
We feel like we're going home. Landmark's been around since 1965; we've had theatres in Edmonton for years and we've always had an office in Edmonton where we have an equipment company for 40 years that sells everything from popcorn to digital projectors. In the old days we owned the Towne, the Jasper, the Mill Woods drive-in," Neil Campbell, chief operating officer of Landmark, said to the Edmonton Journal.