Cineworld has stunned the box office sector by agreeing a $3.6bn (£2.7bn/€3.0bn) reverse takeover of North American cinema giant Regal.

The acquisition of Regal, which operates 7,315 screens in 561 theatres, would lead to the creation of the world’s second largest cinema group, with around 10,000 screens in 10 countries.

Regal sold 211 million tickets in 2016 with revenue of £2.37bn and earnings of £486m. Cineworld announced admissions of 103 million, with revenue at £798m and earnings of £176m during the same period.

Cineworld said it aimed to fund the purchase through a £1.7bn rights issue – the sale of new shares to existing investors – adding that it would also move to raise a further £3bn through the refinancing of existing debt.

Cineworld chief executive Mooky Greidinger said the deal would be beneficial to moviegoers in the US and the combined company’s other markets.

He said: “Regal is a great business and provides Cineworld with the optimal platform on which we can continue our growth strategy.

“Both companies are strongly committed to bringing a high-end cinematic experience to their customers.

“Consolidation is an important move forward and the best practice we have successfully rolled out across Europe will be the key driver to continued success.”

Cineworld said it would look to make some savings across the enlarged group worth £112m which would include the closure of some screens.

The $23-a-share deal has not been backed by the markets, with Cineworld’s share price having fallen by more than 20 per cent since it was first revealed last week.

Regal chief executive Amy Miles said: “We are excited to have reached an agreement with Cineworld, at a price that represents a meaningful premium on Regal’s unaffected share price for our shareholders.”

IMAGE: Philld