Broker snap: Panmure unsure about Cineworld's CCI deal

10th Jan 2014 11:12

Panmure Gordon has maintained it 'sell' rating for cinema operator Cineworld after the company's proposed offer for Poland-listed, Dutch-headquartered Cinema City International (CCI).The offer, which gives CCI an enterprise value (EV) on a debt- and cash-free basis of £503m, would be part-funded by a £110m rights issue at 230p a share.CCI is said to have leading positions in emerging markets such as Slovakia, Bulgaria, Hungary as well as Israel and Poland. "At first glance we struggle to see the logic for the acquisition given management's insistence on the substantial growth opportunities available in the UK and the group's failure to complete its proposed acquisition in Spain," Panmure said.The broker maintained its 260p target price for Cineworld, which represents significant downside to the 426.8p share price on Friday morning, up 8.88% on the day."With another difficult year of trading ahead (disposal of three Picturehouse sites, World Cup impact in June and July, and uninspiring film slate) and now a significant acquisition of questionable logic which introduces higher risk into the investment proposition, we struggle to see many attractions for owning the stock."BC