Cineplex Offers to Acquire EK3 Technologies Inc.

Adrian J Cotterill, Editor-in-Chief

Cineplex Inc. (TSX: CGX) announced Wednesday its offer to purchase EK3 Technologies Inc. an in-store digital merchandising provider, with operations in Canada, the United States and other countries.

logo cineplexThe initial purchase price is approximately $40 million, subject to certain adjustments to be made at closing, plus a reverse earn-out payment subject to an aggregate maximum purchase price of $78 million for both payments. The reverse earn-out payment will be based on 2015 operating results and will be payable in early 2016 in the event certain targets are achieved.

EK3 clients include major retailers, such as Tim Hortons, McDonalds, Walmart, Target, as well as Canadian financial institutions RBC Financial Group and BMO Financial Group.

We are told that the acquisition complements Cineplex’s existing digital signage business, namely Cineplex Digital Media whose clients include Scotiabank, CIBC, SunTrust, Rogers, Oxford Properties, Brookfield office towers and ONroute, among others.

EK3 will be renamed and operate as Cineplex Digital Networks and will continue to be led by EK3 President and CEO, Nick Prigioniero.

“Cineplex’s brand, resources and media sales along with EK3’s proprietary technology platform, network management, award-winning creative services and digital merchandising expertise is a powerful combination,” said Ellis Jacob, President and CEO, Cineplex Entertainment.

“The strengths of CDM and CDN will make us a leader in the indoor digital signage industry and provides a platform for significant growth throughout North America.”

Financial Highlights

EK3 has annual revenue of approximately $26 million and Normalized EBITDA of approximately $4 million. The reverse earn-out payment will be based on a multiple of 6x 2015 adjusted Normalized EBITDA in excess of $4 million, subject to certain adjustments, with an aggregate maximum purchase price of $78 million for both the initial and the earn-out payments.

Closing of the Transaction

Cineplex’s offer is conditional upon acceptance by the holders of 97 percent of EK3’s shares. Closing of the transaction will be subject to customary closing conditions and is expected within two to four weeks.


Cineplex has availability under its existing credit facilities to fund the purchase price.

About Cineplex

Cineplex Inc. is one of Canada’s leading entertainment companies and operates one of the most modern and fully digitized motion picture theatre circuits in the world. A top-tier Canadian brand, Cineplex operates numerous businesses including theatrical exhibition, food services, gaming, alternative programming (Front Row Centre Events), Cineplex Media, Cineplex Digital Solutions and the online sale of home entertainment content through and on apps embedded in various electronic devices. Cineplex is also a joint venture partner in SCENE – Canada’s largest entertainment loyalty program.

Cineplex is headquartered in Toronto, Canada, and operates 136 theatres with 1,454 screens from British Columbia to Quebec, serving approximately 71 million guests annually through the following theatre brands: Cineplex Odeon, SilverCity, Galaxy Cinemas, Colossus, Coliseum, Scotiabank Theatres, Cineplex Cinemas, Cineplex VIP Cinemas, Famous Players and Cinema City. Cineplex also owns and operates the UltraAVX, Poptopia, and Outtakes brands. Cineplex trades on the Toronto Stock Exchange under the symbol CGX.

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