AMC Entertainment Holdings said on Tuesday it would buy London-based Odeon & UCI Cinemas Group to create the world's largest movie theater operator, marking the first big deal by a US company to buy a British firm since the Brexit vote. Odeon & UCI has 11 cinemas in Ireland, with 77 screens.
AMC, the second biggest movie theatre chain in North America, will buy Odeon from Guy Hands' private equity firm Terra Firma in a deal valued at about £921 million.
The deal would have cost AMC about $160 million more before Britons voted on June 23rd to leave the European Union, sending the pound crashing to a 31-year low.
It is also a vote of confidence by AMC in the UK economy, whose outlook has dimmed since the referendum.
"While we acknowledge that there are some uncertainties related to Brexit, we are encouraged that current currency rates are highly favorable to AMC with the pound falling to a three-decade low versus the dollar," AMC chief executive Adam Aron said.
AMC, majority-owned by Chinese billionaire Wang Jianlin's Dalian Wanda Group, would have 627 theatres and more than 7,600 screens in eight countries after the purchase of the biggest theater operator in Europe.
Odeon and UCI, which has 242 theatre and 2,236 screens, will continue to be based in London. It owns four cinemas in Dublin and other properties in Cavan, Charlestown, Naas,Newbridge, Portlaoise,Waterford and Limerick.
Stifel, Nicolaus & Co analyst Benjamin Mogil said in a note the deal was more about expanding AMC's recliner model, enhanced food offerings and technology.
AMC has refitted some of its theatres with recliners instead of standard seating and said that attendance has gone up by 75 per cent at these locations.
The company said it expects the introduction of the features to increase attendance and revenue at Odeon & UCI theaters.
AMC said it would assume £407 million of net debt as part of the deal, which is expected to close by December 31st.
The US company also said it was committed to closing its $1.1 billion acquisition of Carmike Cinemas, which was thrown into doubt after the smaller chain adjourned a shareholder vote on the deal last month.
AMC said it would continue to work with Carmike this week to see if the deal could be saved, while acknowledging that it was at “considerable risk”.
Shares in the company were up 4 per cent at $28.94, while Carmike shares were slightly down.
Reuters
