Wanda’s AMC to Buy European Theater Chain
Deal, helped by a weaker British pound, would make AMC the largest movie-theater company in the world
By ERICH SCHWARTZEL
Wall Street Journal
China’s Dalian Wanda Group Co. made it clear Tuesday that it plans to become the world’s largest movie-theater company one way or another.
In one of the first major deals to take advantage of the weaker British pound, Wanda’s AMC Entertainment Holdings Inc. said it was acquiring Europe’s largest cinema chain, Odeon & UCI Cinemas Group, for £500 million ($650 million).
AMC is awaiting a shareholder vote this week on a separate deal to buy U.S. rival Carmike Cinemas Inc., but that deal faces resistance from major Carmike investors.
Negotiations between Wanda and Odeon date back to 2013, but a decades-low exchange rate brought on by the U.K.’s decision last month to leave the European Union sealed the deal, said AMC Chief Executive Adam Aron.
“We’re certainly not going to be the last [major acquisition],” he said. “There may even be a stampede of U.S. acquirers looking at the United Kingdom.”
AMC is buying Odeon from Guy Hands’s private-equity firm, Terra Firma Capital Partners Ltd., in a deal valued at about £921 million, including £407 million in debt. The deal is 75% stock and 25% cash.
Odeon will remain based in London and keep its brand name. The acquisition is expected to close in the fourth quarter of the year following antitrust review by European regulators.
Mr. Aron said AMC and Terra Firma started the latest round of tie-up talks in March. There was an agreement in place in June, but talks paused as the Brexit vote neared and both sides awaited the outcome, he said.
After the vote sparked turmoil across global markets, AMC and Terra Firma restructured the deal to make £125 million of Terra Firma’s payout come in the form of AMC stock to share risk.
The transaction, if completed, should give AMC the reach to negotiate global deals with contractors, such as in-theater technology companies IMAX Corp. and Dolby Laboratories, as well as Coca-Cola Co., said Mr. Aron.
AMC plans to integrate some of its more successful U.S. concepts, such as recliner seating and expanded food-and-beverage options, into Odeon theaters.
Since Wanda purchased AMC for $2.6 billion in 2012, the Chinese conglomerate has steadily expanded its global theater footprint. In 2015, Wanda bought the Australian cinema chain Hoyts Group for $344 million.
The Odeon deal continues Wanda’s quest to become a global culture conglomerate, said Jack Gao, head of Wanda Film Holdings Co. Wanda’s chairman, Wang Jianlin, has set a goal of eventually owning theaters that bring in 20% of the world-wide box office, said Mr. Gao.
Wanda has also been on the hunt for Hollywood holdings beyond film exhibition. In January, Wanda bought “Jurassic World” financier Legendary Entertainment for $3.5 billion.
Odeon’s 242 theaters and 2,236 screens across several European countries would make AMC the largest film exhibitor in the world—a title the Carmike deal was already poised to bring it.
AMC, based in Leawood, Kan., said in March it was acquiring Carmike for $1.1 billion, or $30 a share.
But major Carmike shareholders balked at the price, with some alleging AMC was undervaluing their company by at least $10 a share, and on Tuesday saying the economics of the Odeon deal further proved that Carmike was undervalued. A vote to approve the acquisition was scheduled for early July but postponed until this Friday.
In New York trading Tuesday, news of the Odeon acquisition sent AMC stock up 7.3% to $29.80. Carmike shares rose 2.2% to $30.39.
AMC is the second-largest movie theater chain in the U.S., and Carmike is No. 4. A tie-up between the two is considered the biggest possible deal in the U.S. movie-theater industry due to antitrust rules.
Mr. Aron said AMC has “not yet” taken Carmike a more generous offer than its $30 a share price. The companies are talking, but “right now we don’t have an agreement,” he said.
“Given that we have Odeon now, we don’t have to do both of these acquisitions,” Mr. Aron said.
—Austen Hufford
contributed to this article.
Write to Erich Schwartzel at erich.schwartzel@wsj.com
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