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Cineplex takeover makes sense as pressure from streamers mounts – Financial Post

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Cineplex Inc. has agreed to be bought by British theatre chain Cineworld in a $2.8-billion deal that, if approved, would create the largest cinema empire in North America, the company announced on Monday.

Cineplex is the dominant theatre banner in Canada, with a 75 per cent share of the box office. But at 1,700 screens, it’s a relatively minor player compared to a giant like Cineworld. In an industry in which streaming services are weaning studios off their dependence on cinemas, joining a giant could be the right move for Cineplex, analysts suggested Monday.

The Cineworld Group plc offer, which values Cineplex at $34 a share, would boost Cineworld’s screen count to more than 8,900 screens in North America, surpassing AMC and making it the largest cinema circuit on the continent, Cineworld chief executive Moshe Greidinger told investors on a conference call.

Cinemas have been struggling to hold on to their right to screen films exclusively for several months before they’re shown on other platforms. With studios such as Disney running their own streaming services, the pressure to shrink the theatrical window will grow, said Sam La Bell, head of research at Veritas Investment Research.

“You want to have enough bargaining power with the studios so you can have sway,” he said. “The bigger you are, the more bargaining power you have.”

The deal needs to clear several hurdles before it is approved, including a seven-week period during which Cineplex can solicit competing offers. But analysts didn’t have high expectations for the go-shop phase.

“We believe that this transaction is most likely the end game,” CIBC analyst Robert Bek wrote in a research note. “There is low probability that a white knight will step in with a competing bid, however this scenario is not off the table.”

The deal also needs regulatory approval in Canada, two-thirds approval from Cineplex shareholders, and approval from a simple majority of Cineworld shareholders. Cineworld says it already has assurances from its largest shareholder, which owns a 28 per cent stake.

We don’t see any deal threats to the deal, just some baggage to drag across the line

Robert Bek, analyst, CIBC

“While current market share of Canadian box office at 75-per-cent-plus may lead to anti-trust scrutiny from the regulatory body, we don’t see any deal threats to the deal, just some baggage to drag across the line,” Bek wrote.

If the deal goes through, Greidinger said he will roll out Cineworld’s Unlimited subscription plan in Canada, allowing moviegoers to watch as many films as they want for a monthly fee.

“The success of Unlimited is really indisputable,” Greidinger said.

After closing at about $24 on Friday, Cineplex shares soared following the acquisition announcement Monday, closing at $33.96 — just below Cineworld’s offer. The $2.8 billion transaction value includes the assumption of net debt, Cineplex said.

“Given Cineplex’s recent share price underperformance, valuation and high-quality asset mix … we are not entirely surprised,” RBC analyst Drew McReynolds wrote about the deal.

Amid turbulence in the business, Cineplex has taken strides to diversify itself, entering the restaurant sector with its Rec Room chain of pub-arcade hybrids. It also runs the Playdium arcade chain and an arcade-equipment rental business. On the movie side, Cineplex has added a slate of premium screening options — VIP theatres, enhanced viewing experiences such as UltraAVX and 4D — to distinguish itself from the experience of watching at home, allowing the company to extract more revenue from a shrinking audience base, La Bell said.

While Greidinger spoke positively about Cineplex’s non-theatre businesses on Monday, analysts questioned how long they’d last after the entirely debt-financed deal.

“Asset sales are probably in the mix,” Le Bell said, suggesting that Cineworld will be motivated to pay down debt and might not be interested in staying in the restaurant business. Greidinger, however, noted that Cineplex’s arcade supplier sends equipment to other theatres in the Cineworld network.

He said Cineworld is expecting to realize US$130 million in cost savings after the purchase.

“Consolidation is a part of the life today,” Greidinger said, adding that the number of screens in his empire “is not what counts.” What counts, he said, is “cash flow and the profit.”

Theatres are ultimately competing for attention, said Kaan Yigit, president and research director at Solutions Research Group Consultants Inc. That means they’re not just up against streaming services.

“So if you want to compete for attention with that scale/size, you either have to be a narrow specialist or of a certain size yourself,” Yigit said in an email.

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Male teen who worked at Ontario long-term care home has died of COVID-19, health unit says – CBC.ca

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A male teenager who worked at an Ontario long-term care home has died of COVID-19, the Middlesex-London public health unit said Saturday.

Dan Flaherty, spokesperson for the Middlesex-London Health Unit, said one of the three deaths it reported on its website Saturday is a staff person. The other two people who died, a man in his 60s and a woman in her 80s, were also associated with long-term care homes.

The teen is the youngest person in the region to have died of COVID-19. The teen’s age and workplace have not been released.

“We are not able to provide any other information including the individual’s exact age or the facility where they worked, as this could risk identifying them,” Flaherty said in an email.

Dr. Alex Summers, associate medical officer of health for the Middlesex-London Health Unit, told CBC News Network’s Natasha Fatah that the young man was recently diagnosed with COVID-19 and was a staff member at a long-term care home.

The diagnosis came within the last four weeks and his infectious period had actually ended, Summers said. An investigation is underway into the death, he said.

Summers called it a “tragic young death” in the region. “It’s certainly a very sad day and a reminder of how the impact of this pandemic can be felt,” he said.

“This is the youngest person who had been diagnosed with COVID who has died since the beginning of the pandemic for us in our region.”

‘It’s a tragic day,’ health official says

Summers could not say if the young man had underlying health conditions. The investigation is looking into that, he added. 

Summers previously said the teen was not working at a long-term care home while infectious, but the health unit now says the teen did work at the home for a short period of time, early on in the infectious period, before going into isolation.

He said the health unit believes some members of his immediate household may end up testing positive for the virus.

“COVID-19 transmits very readily among households,” he said.

Summers said the anticipated spread to his family is “just another reminder of how infectious this disease certainly can be.” Members of the health unit have spoken to the young man’s family, he said.

“It’s a tragic day,” he said. “I think there is a sense of sorrow among us today.”

In an email to CBC Toronto, Ontario’s long term care ministry confirmed the death of a long-term care home worker but provided no other details.

“We extend our deepest condolences to their family, friends and colleagues,” Rob McMahon, spokesperson for the ministry, said in an email on Saturday.

“Due to sensitivities and requirements for protection of privacy for Ontarians, and for protecting Ontarians’ confidential personal and health information, we cannot comment on individual cases,” McMahon added.

“We are grateful for the hard work and dedication of all long-term care staff working under challenging conditions to care for our most vulnerable during the pandemic.”

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London-area teen 11th long-term care worker to die of COVID-19 – CityNews Toronto

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A teenage male has become the 11th long-term care worker to die of COVID-19 in the province.

The London-Middlesex Health Unit confirmed that one of three coronavirus-related deaths reported Saturday is a teen who worked in a long-term care setting. While they would not confirm his age or the name of the facility he worked at, they do say he is the youngest person with COVID-19 to pass away in the region.

The death was first reported after provincial data released on Saturday showed there had been an additional healthcare worker death.

There are currently 252 long-term care homes in the province experiencing a COVID-19 outbreak. A total of 3,322 residents have died of the virus since the start of the pandemic, including 210 in the past week alone.

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Too soon to know if Canada's COVID-19 case decline will continue, Tam says – CTV News

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MONTREAL —
Canada’s chief public health officer says it’s still too soon to know whether the recent downward trend in new COVID-19 cases will continue.

Dr. Theresa Tam says there’s been an improvement in the COVID-19 numbers in B.C., Alberta, Ontario and Quebec but the disease is regaining steam elsewhere.

She says it appears local health measures may be starting to pay off, but it’s not clear whether they’re strong and broad enough to continue to sustain progress.

Some long-standing virus hot spots have made headway in lowering the number of new cases in recent weeks, but are still fighting outbreaks and flare-ups as they race to vaccinate vulnerable communities.

The federal public safety minister announced today that the Canadian Armed Forces will support vaccine efforts in 32 First Nations communities in northern Ontario.

Quebec, meanwhile, reported a fifth straight decline in the number of hospitalizations as the health minister urged citizens to keep following health measures.

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