(Yonhap)

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South Korean cinema operators Lotte Cultureworks Co. and MegaboxJoongang Inc. signed an agreement to merge, a move that could reshape the country’s struggling theater industry.

Lotte Cultureworks, a unit of Lotte Shopping Co. that operates Lotte Cinema, and Megabox, which is owned by MegaboxJoongang, inked a memorandum of understanding (MOU) on Thursday to pursue the merger.

Lotte Shopping holds an 86.37 percent stake in Lotte Cultureworks while Contentree JoongAng Corp., one of the affiliates of JoongAng Group, owns 95.98 percent of MegaboxJoongang. Both firms are active in theater operations and film investment and distribution.

If completed, the merger would create the country’s largest cinema chain by number of theaters, overtaking industry leader CJ CGV Co. A newly founded entity will be co-managed by both companies, with the duo to seek regulatory approval from the Korea Fair Trade Commission and attract new investment.