The Curtains Begin to Close on Empire Theaters

The company’s plans to get out of the cinema business is taking shape.

| More on:
The Motley Fool

By Cameron Conway

Last week, Cineplex (TSX:CGX) announced that it completed its $194 million acquisition of 24 of the 50 theaters previously owned by Empire Theaters. These 24 theaters are located in Atlantic Canada, a territory previously left untapped by Cineplex. This now gives Cineplex complete coast-to-coast coverage across Canada with 161 theaters running 1,635 screens.

Cineplex received approval in the form of a No Action Letter from the Federal Competition Bureau on Oct. 10, after the FCB determined that since Cineplex had no previous locations in Atlantic Canada, it would not affect local competitiveness. But Cineplex was required to back out of two potential properties in Ontario (Kanata and Whitby) to address the requirements of the FCB.

“We have realized our vision of making Cineplex a truly national, coast-to-coast company,” said Cineplex President and CEO Ellis Jacob in a statement. “Atlantic Canadians are accustomed to a high standard of theatre entertainment, and our goal is to make it even better — with our SCENE loyalty program, Cineplex Tuesdays, and the many other benefits of Cineplex ownership.”

With the change in ownership, residents in Atlantic Canada should be prepared to see not only new signage but hopefully internal upgrades that would have UltraAVX and VIP Cinemas (which I quite enjoy) come to the Maritimes.

This marks the first of two curtain calls for Empire Theaters since the summer announcement by parent company Empire Company (TSX:EMP-A) that it would be divesting its cinema investments in order to give full priority to its core retail business, the grocery chain Sobeys.

The second curtain call will come with the completion of a deal that would see Landmark Cinemas purchase 22 of the 26 remaining Empire theaters. While Cineplex used this opportunity to gain new ground in Atlantic Canada, Landmark would also gain new territory in Western Canada and Ontario. This leaves four other locations that are expected to close unless smaller investors step in to purchase them.

While no doubt a difficult decision, investors should cheer Empire’s decision to divest — it can now focus on its “core,” and has some $255 million with which to pay down debt or reinvest in that core.

Three top stocks from The Motley Fool
Looking to expand your portfolio’s horizons? The Motley Fool has put together a Special FREE Report featuring “3 U.S. Stocks Every Canadian Should Own.” To get the names and ticker symbols of these three stocks, just click here to access your free copy!

Cameron Conway does not own shares in any of the above mentioned companies.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

money cash dividends
Stocks for Beginners

Have $500? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

If you're looking for cheap stocks, these three have a huge future ahead of them, all while costing far less…

Read more »