AMC Theatres, a unit of AMC Entertainment Holdings, Inc. (NYSE: AMC), revealed that it reached a definitive agreement to buy the biggest theatre
exhibitor in Europe, Odeon & UCI Cinemas Group from private equity firm Terra Firma. According to the company, the transaction was
worth about £921 million consisting of £500 million for the equity, 75% in cash and 25% in stock consideration, subject to
lock-ups. That apart, there was assumed net debt of £407 million, which would simultaneously refinanced at closing.
AMC Entertainment said that based on the presumption that the transaction would close before the current year ends, the
transaction is worth at about $1.199 billion under UK GAAP.
The company expects the acquisition to boost attendance and revenue at Odeon & UCI theatres after the launch of its proven and
successful guest experience tactics. The company added that it would be placed on accelerating AMC's proven growth initiatives,
featuring recliner seating, improved food and beverage and premium large format auditoriums. It would also further develop Odeon &
UCI's innovative marketing, customer relationship management and pricing expertise.
AMC expects the acquisition to further expand its footprint by adding theatres with complementary global geographic, as well as,
guest demographic profiles strengthening the merged entity's growth potential. The company added that to complement its domestic
acquisition strategy, Odeon & UCI would create a strong and scalable market position in Europe and establish a strong platform for
AMC to pursue additional domestic and global growth when it could do so on terms favorable to its shareholders.
The company's CEO and president, Adam Aron, said, "This is a once-in-a-generation opportunity to acquire Europe's leading cinema
chain and create the world's biggest and best theatre operator. With this opportunistic transaction, AMC will be extending the
reach of our proven guest experience strategies to transform the movie-going experience for millions of movie goers in Europe."
He continued, "Odeon & UCI is a great business with iconic brands, strong market presence and passionate teams, and their
impressive recent transformation is just the beginning. By introducing AMC's operational expertise, scale and innovative guest
initiatives across Odeon & UCI's prime theatre locations and digital channels, we expect to drive attendance in these international
markets and leverage the growing international demand for movie-going. 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. In total, we believe this transaction will generate long-term value for our guests, our studio
partners and our shareholders."
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.