Two Greater Victoria movie theatres will continue to operate as usual despite an announcement today that their parent company is getting out of film to focus on groceries.
Empire Company Ltd. wants to focus on Sobeys, its national grocery chain, said company spokesman Andrew Walker. He said the company will hold onto its Empire Capitol Six multiplex in Victoria and is selling its Empire University Heights in Saanich to Landmark Cinemas.
“The Cap Six is not included,” he said. “That one we are keeping and expect to realize the real estate value of that property over time."
Empire’s flagship downtown multiplex at Yates and Blanshard streets is not currently on the market, however, he added.
“It will run as-is,” said Walker, adding all theatres would continue to run as Empire theatres until the deal is approved by the Competition Bureau.
Canada’s largest cinema company, Cineplex Inc. (TSX:CGX), will pay $200 million cash to acquire 26 of Empire’s theatres, which includes all 24 of its theatres in Atlantic Canada and two in Ontario.
Cineplex said the deal is strategically important since it gives the Toronto-based company a presence in Canada’s four most eastern provinces.
The sale would give Cineplex 78 per cent of the movie-theatre business in Canada.
The theatres Cineplex is acquiring generated $113 million in revenue in 2012, according to RBC analyst Haran Posner.
Empire University Heights is one of 20 Empire theatres in Ontario and Western Canada being sold to Landmark Cinemas for as much as $55 million.
Landmark will pay $31 million cash, plus equity in a new entity worth $19 million, as well as an earn-out right estimated to be worth $5 million. Landmark will be able to buy the equity from Empire for $19 million until Dec. 31.
After the sales, Empire said it will have four theatres left over. In addition to Empire Capitol 6, three others in New Glasgow, N.S., will be sold as real estate.
Empire said it will decide what to do with the other two theatres, both located in Ontario, when their leases expire in August and December. The company says it will likely sell those theatres or close them.
The company will use the proceeds of the sale to pay down debt, Walker said.
Empire also announced Thursday that it had $98.6 million or $1.45 per share of adjusted earnings in the fourth quarter, up $9 million from a year earlier and eight cents per share above the consensus estimate.
The company’s net income for the quarter ended May 4, before adjustments, and was $107.4 million or $1.58 per share, up from $92.1 million or $1.35 per share a year earlier.
After the quarter ended, Empire announced that it will pay $5.8 billion to acquire Safeway’s Canadian grocery business, adding about 213 grocery stores in Western Canada as well as in-store pharmacies, gas stations, liquor stores, distribution centres and 12 manufacturing plants.
Sobeys , which accounts for most of Empire’s revenue, already owns or franchises more than 1,300 stores across Canada under several banners that include Sobeys, IGA, Foodland, FreshCo, and Thrifty Foods.
With files from The Canadian Press and Andrew Duffy, Times Colonist
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