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

Businessman holding AI cloud
Tech Stocks

2 Stocks That Could Grow Your Portfolio Over the Next Decade

These two TSX stocks could be stellar additions to your long-term portfolio, given their multi-year growth potential and discounted stock…

Read more »

Wireless technology
Tech Stocks

These Tech Stocks Are Growing up to 138% Despite the Recession

Growth stocks like WELL Health Technologies (TSX:WELL) are thriving, despite the recession.

Read more »

close-up photo of investor Warren Buffett
Stocks for Beginners

New to Investing? Here’s 1 of Warren Buffett’s Most Important Quotes

As market uncertainty continues to intensify, here's some advice from the Oracle of Omaha to help you navigate this environment.

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

Want Easy Passive Income? Go With These 3 Canadian Dividend All-Stars

Are you looking for easy passive income? Here are three Canadian dividend all-stars.

Read more »

Man data analyze
Investing

3 of the Top-Growing Stocks on Earth

Canadians desperate for growth in a shaky market may want to look to growing stocks like Cardinal Health Inc. (NYSE:CAH).

Read more »

Nickel ore is mined from the ground.
Metals and Mining Stocks

Offset Market Volatility With a Shiny Investment

Looking to offset market volatility with a shiny investment you can hold for the long-term? Here’s a precious option to…

Read more »

grow dividends
Tech Stocks

BlackBerry (TSX:BB) Stock: The Best Buy for Your RRSP

BlackBerry stock is still falling after its quarterly result, despite a 28% revenue increase in its Internet of Things segment.

Read more »

green energy
Dividend Stocks

These Monthly Dividend Payers Could Carry Your Portfolio for Years

Building a portfolio takes years. Without further ado, invest in these monthly dividend payers and start earning.

Read more »