After a starter of European Small Caps. and a main course of The Restaurant Group earlier this week, today I finish the week with a write up on another of my holdings, Cineworld Group. They have today announced an 8 for 24 Rights Issue @ 230p and an intention to acquire Cinema City International. You can read more details at the link above.
My take on it is that it looks like a good deal which at a stroke gives them a new CEO to replace the existing founder who is retiring and gives them a new international dimension in Eastern Europe and Israel. They talk about it being earnings enhancing in the full year 2014 and substantially thereafter and it meeting their cost of capital by 2016. They also mention £2 million of synergies from cost savings in the first year.
This seems sensible to give them international diversification in line with their competitors and since they have nearly 30% of the UK market I guess growth opportunities in this country are now somewhat limited. The market seems to like it as the share are up around 8% at the time of writing. I am happy to stay in my seat for this one and hope it continues to be a long term thriller rather than a horror story. Only nagging doubt longer term is whether film streaming in the home might damage cinema attendance in the long run, but I presumably they said that when television was invented. I guess it remains a cheap (?) night out and a bit of an escape for people in these difficult times.
Finally, if you are looking for a night out and film to go and see (at a Cineworld hopefully) the latest film (released 17/1/14 in the UK) from Martin Scorsese - The Wolf of Wall Street, starring Leonardo De Caprio, looks like it should be amusing, if a little long at 180 minutes. You can see the trailer here - enjoy.