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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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Drugmaker Novavax begins late-stage vaccine trial in U.K. – CTV News

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LONDON —
U.S.-based Novavax has begun a late stage trial of its potential COVID-19 vaccine in the United Kingdom because the high-level of the coronavirus circulating in the country is likely to produce quick results, the pharmaceutical company said.

Novavax plans to test the effectiveness of its vaccine in a trial involving 10,000 people between the ages of 18 and 84, according to a statement issued late Thursday. At least 25% of the subjects will be over the age of 65, and 400 participants will also receive a licensed flu vaccine.

The trial is being conducted in partnership with the U.K. government’s Vaccine Taskforce, which was created in April to help speed the development of a COVID-19 vaccine.

“With a high level of SARS-CoV-2 transmission observed and expected to continue in the U.K., we are optimistic that this pivotal phase 3 clinical trial will enrol quickly and provide a near-term view of (the vaccine’s) efficacy,” Dr. Gregory M. Glenn, head of research and development for Novavax, said in the statement.

The announcement comes as COVID-19 cases continue to rise across the U.K. The government reported 6,634 new positive test results on Thursday — the U.K.’s highest daily number since the pandemic began. Britain has the deadliest outbreak in Europe, with nearly 42,000 confirmed COVID-19 deaths.

Drugmakers are rushing to develop COVID-19 vaccines with the backing of governments desperate to find a way of easing restrictions that have hammered the world economy.

The U.K. has already agreed to buy 60 million doses of the Novavax vaccine to ensure it can be distributed as quickly as possible if it is approved by regulators.

The government said Friday that participants in the Novavax trial will be drawn from the 250,000 people who have volunteered to take part in COVID-19 vaccine testing through the National Health Service’s Vaccine Registry.

“Finding a safe and effective vaccine that works for the majority of the U.K. population is the best way to tackle this devastating disease,” said Kate Bingham, chair of the government’s Vaccines Taskforce. “Whilst social distancing, testing and other measures can help reduce the impact of coronavirus, the only long-term solution to beating it will be finding a vaccine.”

Novavax also pledged to publish details of its vaccine testing protocol “to enhance information-sharing during the worldwide pandemic.”

Drugmakers are under pressure to release more information about the progress of their vaccine trials — information they normally wouldn’t release until the trials are complete — to increase public confidence in their work.

Several other big pharmaceutical firms, including AstraZeneca, Moderna and Pfizer, have already released the protocols for their trials.

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Demand for sports equipment and home gyms booms as Canadians prepare for pandemic winter – CBC.ca

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Canadians in need of sports equipment and fitness gear to stay healthy and have fun during a pandemic winter have learned a valuable lesson: Shop early to avoid disappointment.

“People saw what happened with kiddie pools and fitness equipment in the spring,” said Gillian Montgomery, who co-owns Skiis and Biikes, a sporting goods chain with three locations in southern Ontario. Her stores are already unusually busy.

“Normally we don’t have interest in winter products until we see the snow and even until Christmas, but this year we’ve had maybe 30 calls just since September about getting cross-country skiing equipment.”

At Calgary’s Abom Ski & Board, owner Randy Ahl already has a “big, long” waiting list for entry-level cross-country ski packages that haven’t even arrived at the store yet.

Wait lists already growing

“Whether it’s a couple or a family, they’re saying, ‘We want a phone call when those things come in,'” said Ahl, who has already outfitted entire families with boots, poles and skis that he does have in stock. “I consider over $2,000 to be a fairly big purchase, and that’s happened already more than a dozen times.”

People who plan to exercise indoors are prepping as well.  

Drew Berner has installed a home gym in his Toronto garage.

I fully intend to be out there all winter long,” said the father of three-year-old twins. “My garage is detached, but it is insulated, and I’m going to get a little space heater.”

Early in the pandemic with gyms locked down, health-conscious Canadians made alternate arrangements, following along with exercise instructors on YouTube, joining classes held in parks, or buying exercise gear to use at home. 

Drew Berner of Toronto hustled to assemble a gym in his garage, as many retailers were sold out of equipment and used goods were in hot demand. (Submitted by Drew Berner)

But many retailers were unable to satisfy demand for sporting goods and fitness equipment. Canadian Tire experienced triple-digit growth in the category. 

“Consumer demand far exceeded both historical demand and available inventory,” the company said in a statement to CBC News.  

A sense of urgency

When Berner tried to find a set of weights, an exercise bike and a rowing machine for his garage gym, he found most were already sold out. Only by persisting was he able to get what he needed. He spent $3,000 on a mix of new and second-hand equipment.

“That involved everything from having alerts set on Kijiji … to having email alerts from stores so I would be notified as soon as they had things I wanted in stock,” said Berner, noting that he had to act fast before another buyer scooped them up. 

Now, as cases of COVID-19 surge across Canada, national fitness chains such as GoodLife Fitness and F45 Training remain open — with limited capacity. Even so, some gym members are unwilling to return to an environment where people breathe heavily and sweat. And the market for used goods is again red hot.

The most popular search terms on online seller Kijiji are still dumbbells, ellipticals and exercise bikes, said company’s manager of community relations, Kent Sikstrom.  

Second-hand Peloton Bikes have more than doubled since this time last year, while inquiries about elliptical machines are up 39 per cent and treadmills inquiries are up 15 per cent. 

Brother and sister team Devin and Gillian Montgomery, owners of Skiis and Biikes, a small Ontario sporting goods chain, say their stores are unusually busy for this time of year. (Submitted by Devin and Gillian Montgomery)

“Probably in the next couple of weeks we may see snow shoes, cross-country skis,  sleds, and snowboard begin to create a new trend for the season,” said Sikstrom. 

eBay Canada, which sells both new and used goods, is also reporting significant increases. Stair machines are up 230 per cent from this time last year, while treadmills sales are up 280 per cent, according to the head of the Canadian operation, Rob Bigler.

Gear not essential

“We’ve been super busy,” said Bigler. “It’s a great time to sell that treadmill that’s been sitting in your basement, maybe being used to hang up laundry.”

But Samantha Monpetit-Huynh, a fitness coach and trainer in Toronto, pointed out that a lot of gear isn’t essential to stay active and healthy.

Randy Alh, right, the owner of Calgary’s Abom Ski & Board, stands with customer Ken Dyer. Alsh has started a wait list for beginner cross-country ski packages because of the demand. (Submitted by Randy Ahl)

“People forget your body is probably the best piece of equipment you’ve got,” she said. “You don’t need all this stuff — you just need to move and you need to do it regularly. More than once a week.”

Monpetit-Huynh said it’s possible to use laundry detergent bottles or soup cans as weights, and go for walks or runs. However, she recently invested $3,000 in a brand-new Peloton exercise bicycle that allows her to join spinning classes remotely.

“I love going to the gym, but I thought, ‘You know what? I should get something because if we get a second wave I want to be prepared.'”

Berner said for him, there’s more to it than fitness.

“Exercise is crucial for my mental health,” he said. “I notice even if I go for a couple of days without exercise my mood starts to drop.”

Other Canadians who feel the same and haven’t yet made a plan would be well advised to start considering their options — or risk getting left out in the cold during a long pandemic winter.

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Did you return from Teck mine in B.C.? Get tested and stay isolated, says N.L. government – CBC.ca

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The Teck coal mine in Elkford, B.C., has suffered an outbreak of COVID-19 and any workers who returned to Newfoundland and Labrador in the last 14 days are told to stay home and get tested.

That means every worker who came back on or after Sept. 14 must isolate away from their families, and stay at home for the full 14 days regardless of their test results.

The Department of Health and Community Services is also asking anyone who came back from the mine after Aug. 31 to get tested for COVID-19 out of an abundance of caution.

This is the fourth work site identified by the Newfoundland and Labrador government that has suffered an outbreak. Outbreaks at the Canadian Natural Albian oil sands site, the Syncrude Mildred Lake oil sands site, and the Suncor base plant site — all in Alberta — are still active.

The rules for rotational workers from Newfoundland and Labrador who travel outside the Atlantic Provinces do not apply to work sites that have active outbreaks. While others can leave isolation after a negative test result, workers from outbreak sites must remain isolated during their time at home.

Read more from CBC Newfoundland and Labrador

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