KNOXVILLE, TN—Regal Entertainment Group (REG), the nation's second-largest movie theatre operator by screen count, confirmed Tuesday evening that it's in advanced talks with UK-based Cineworld plc about a possible merger. Shares of REG were up Wednesday morning on news that Cineworld might acquire REG in an all-cash deal valued at $23 per share, or more than $3 billion. Confirmations from both REG and Cineworld followed published reports of merger discussions.

Although entertainment venues, including theatres, increasingly are seen as lures to brick-and-mortar shopping destinations, the movie exhibition industry has been buffeted this year by relatively lackluster ticket sales along with ongoing competition from Netflix and other streaming services. For REG in particular, stock prices have been down 21% over the course of 2017, while its chief competitor, AMC Entertainment Holdings, has seen its shares decline by 52%, according to Bloomberg News.

Cineworld said it would fund the potential acquisition through a combination of incremental debt and a material equity raise by way of a rights issue, including a commitment to full subscription from its largest shareholder, Global City Holdings N.V. Both Cineworld and REG said there were no assurances that a deal would happen.