Cinema group Cineworld is to buy US cinema chain Regal Entertainment, making the company the second largest cinema chain in the world.
Valuing the company at $3.6bn (£2.7bn), Cineworld has agreed a proposal with Regal to buy the company in cash.
The enlarged group will cover 10 countries and will have 9,542 screens, making it the second largest cinema operator by number of screens.
It is expected that the acquisition will also yield savings of $100m on an annualised pre-tax basis.
But some Cineworld shareholders have expressed concern that the group will overstretch itself by expanding into the US through the takeover.
Today, analysts said Cineworld faced challenges in the takeover. Russ Mould of AJ Bell said: "Cineworld will need to ensure that it can meet its targets of $100m in cost and revenue synergies and a further $50m benefit from tax and financial planning to reassure shareholders that the deal can start to add value relatively quickly and justify the execution and financial risks involved."
Analysts at Peel Hunt downgraded their rating on the company from "add" to "hold", citing higher debt and reduced growth prospects, which affected the long-term equity outlook.
However, chief executive Mooky Greindinger, whose family is the majority shareholder in the company, hit back at criticism, saying the family was "putting our wallet where our mouth is".
"We are taking the whole of our new share in the rights issue," he said. "We have big plans for the future. We believe this can be a big success story."
Cineworld was one of the biggest fallers in the FTSE 250 today, but recovered slightly to close down 0.46 per cent at 543.5p.
Amy Miles, CEO of Regal, said the decision to sell was due to a focus on "delivering superior shareholder value".
She said: "The combination of our two great companies, Cineworld's tremendous success in the UK, as well as other markets they have entered since, and Cineworld's commitment to maintain a strong presence in the US and Knoxville, provide a global platform positioned for continued growth and innovation."