Dalian Wanda Group Co. Ltd. of Beijing closed on its acquisition of locally based AMC Entertainment Holdings Inc., paying $2.6 billion and becoming the world’s largest movie theater owner in the process. The transaction effectively relieves AMC from its load of debt, while providing capital for movie theater upgrades and expansions.
From a commercial real estate perspective, the main impact of the acquisition will be better-looking movie theaters, as Wanda is funneling a lot toward capital improvements. “Wanda’s committed to putting half a million dollars of new capital to get the theaters looking better,” notes Ben Mogil, managing director with Stifel, Nicolaus’ Toronto office. Mogil, an analyst who cover the media and entertainment industries believes that better-looking movie theaters will have a strong impact on the industry overall.
In a Bloomberg article that ran in May 2012, AMC CEO Geraldo Lopez said the upgrades will include more Imax and 3-D screens, as well as the addition of more bars and dining options. In that same article, China Merchants Securities’ managing director Ronald Wan noted that the acquisition will assist in Wanda’s overseas expansion.
But with the dust on this particular acquisition settled, Mogil says he doesn’t see a plethora of similar deals in the works. “You might see consolidations among the smaller players, but not of this size,” he tells GlobeSt.com.
As to international money buying a U.S. entertainment company, Mogil says this isn’t exactly a new trend. At one point, for example, the Loews Theatre chain in Cincinnati merged with Cineplex Odeon Corp. of Canada; the combined company, Loews Cineplex Entertainment eventually merged with AMC. “The history of the industry, over the years, has had a lot of foreign owners,” Mogil adds. “A lot of people just didn’t know it.”
According to an 8K filed Sept. 4 with the Securities and Exchange Commission (SEC), AMC was owned by funds belonging to JP Morgan Partners LLC; Apollo Management LP and Bain Capital Partners LLC, as well as funds sponsored by Carlyle Group and Spectrum Equity Investors. Furthermore, while operations of the theaters will remain the same and most of the 18,500 employees will remain with the company, the merger did lead to a change in the company’s board of directors. AMC headquarters will remain in Kansas City.
