AMC Entertainment Snaps Up Britain's Odeon & UCI Cinemas

The Leywood, Kans. movie theater operator pays about $1.2 billion for the private equity-backed business.
By Jonathan Braude ,

Chinese-backed cinema operator AMC Entertainment (AMC) - Get Report booked the screens for its latest takeover blockbuster Tuesday, with an agreement to buy Europe's largest movie theater group Odeon & UCI Cinemas for a valuation of about £921 million ($1.2 billion).

The seller is London private equity firm Terra Firma, led by British financier Guy Hands, which first bought the company in 2004 and has since built the chain up from just over 1,450 screens to 2,236 today.

AMC, of Leywood, Kans., insisted the deal will not impact its plans to buy U.S. rival Carmike Cinemas (CKEC) , which it agreed to buy for $1.1 billion in March this year. Those plans have been held up by opposition from some of Carmike's shareholders, including Mittleman Brothers and Driehaus Capital Management, leading to a postponement of a Carmike shareholder vote on the deal.

In its statement, Tuesday, AMC, which is 80% owned by china's Dalian Wanda, said it "remains interested in and, and committed to, closing the Carmike transaction.

"The Odeon & UCI transaction does not impact AMC's ability to complete the Carmike transaction as AMC has the financing commitments and flexibility to do both transactions," AMC said.

"Even without taking into account the potential Carmike transaction, the combination of AMC & Odeon & UCI will make AMC the largest movie theater operator in the world."

With 242 theaters and 2,236 screens, Odeon & UCI is currently the No. 1 theater operator in Europe. With 90 million tickets sold annually, it is also the No. 1 theater operator in the U.K. and Ireland, Italy and Spain; the No. 2 theater operator in Austria and Portugal; and the No. 4 theater operator in Germany. Odeon & UCI had just under $1.16 billion of revenue for the twelve months ending March 31.

The combination of AMC and Odeon & UCI will result in AMC's operation of 627 theater and more than 7,600 screens in eight countries.

AMC said the £921 million enterprise value includes £500 million for the equity, 75% in cash and 25% in stock, and the assumption of £407 million of net debt as of March 31.

""This is a once-in-a-generation opportunity, to acquire Europe's leading cinema chain and create the world's biggest and best theater operator," said AMC CEO and President Adam Aron, calling the deal an "opportunistic transaction."

He said the fall of the pound against the dollar helped to counter some of the uncertainties about European cinema-attendance related to Britain's Brexit vote to leave the European Union, and said AMC believes "this transaction will generate long-term value for our guests, our studio partners and our shareholders."

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