Former AMC Theatres honcho Stan Durwood has to be celebrating somewhere…
The tiny movie theater chain Durwood built with his family decades ago is about to become the largest in the world. Not that AMC wasn’t already a mighty player in the industry, ranking # 2 in size behind Regal Theatres.
However, with the announcement by AMC’s new president and CEO Adam Aron that they’re about to acquire the nation’s fourth largest circuit CARMIKE CINEMAS, will make the Leawood based exhibition company the largest in the world!
That’s right, with 8,380 screens in 663 theater locations, Leawood, Kansas is now the movie theater capitol of the world.
Has a nice ring to it, doesn’t it?
And to think, AMC’s new boss has only been there since just this January.
$1.1 billion is the reported price tag for Carmike, but the deal really makes sense since AMC has operated primarily in larger markets while Carmike’s fortunes come from mid-size to smaller burgs.
And theres not too much overlapping of markets which should be a plus with the Department of Justice.
So who will be the prime benefactor in this deal?
To my thinking, AMC’s shareholders and its primary ownership, the Chinese Wanda Group will be the main beneficiaries.
Which could make for better negotiated film rental deals for AMC with the Hollywood studios.
After all, 8,000-plus screens makes for pretty impressive purchasing power.
Ditto with equipment manufacturers and concession suppliers.
Will such savings be passed on to moviegoers?
Probably not, but time will tell.
Compare it to recent airline consolidation and what that has done for the consumer.
Nuff said?
Incidentally, if you’re wondering where the closest Carmike theaters are, they’re in Warrensburg and Manhattan.
The AMC-CARMIKE deal is expected to close by years’ end.
but are they going to move?
That rumor has been going around for some time now. But they can sure operate cheaper out of KC than LA!
Isn’t AMC now based in China?
No, they are based in Leawood, Ks as a subsidiary of The Wanda Group. (I believe Wanda owns about 75% of AMC.)
And Wanda just this past January bought LEGENDARY ENTERTAINMENT (i.e. Legendary Pictures) which partners with and releases its pictures through companies like Warner Bros. and Universal.
Legendary is based in Burbank.
They are still owned by a Chinese company who I’m sure calls the shots and therefore are a possible if not probable communist Chinese propaganda arm.
I no longer go to AMC and would suggest others stop giving the Chinese any more money.
Chinese companies have been buying up foreign businesses, including American ones, at a record rate, and it’s freaking lawmakers out.
There is General Electric’s sale of its appliance business to Qingdao-based Haier, Zoomlion’s bid for the heavy-lifting-equipment maker Terex Corp., and ChemChina’s record-breaking deal for the Swiss seeds and pesticides group Syngenta, valued at $48 billion.
Most recently, a unit of the Chinese conglomerate HNA Group said it would buy the technology distributor Ingram Micro for $6 billion.
And the most contentious deal so far might be the Chinese-led investor group Chongqing Casin Enterprise’s bid for the Chicago Stock Exchange.
A deal spree
To date, there have been 102 Chinese outbound mergers-and-acquisitions deals announced this year, amounting to $81.6 billion in value, according to Dealogic. That’s up from 72 deals worth $11 billion in the same period last year.
And they’re not expected to let up anytime soon. Slow economic growth in China and cheap prices abroad due to the stock market’s recent sell-off suggest the opposite.
“With the slowdown of the economy, Chinese corporates are increasingly looking to inorganic avenues to supplement their growth,” Vikas Seth, head of emerging markets in the investment-banking and capital-markets department at Credit Suisse, told Business Insider earlier this month.
Forty-five members of Congress this week signed a letter to the Treasury Department’s Committee on Foreign Investment in the US, or CFIUS, urging it to conduct a “full and rigorous investigation” of the Chicago Stock Exchange acquisition.
“This proposed acquisition would be the first time a Chinese-owned, possibly state-influenced, firm maintained direct access into the $22 trillion US equity marketplace,” the letter reads.
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Whenever I read terms like “Inorganic” with respect to mergers, acquisitions, buy outs, etc. etc. I know, somewhere, someplace, somehow, someone is getting T Rexxed right up the azz.
I think Yale and Columbia probably insist on a minor in “Metaphors” before graduating from their MBA programs. Then, future “Wolves of Wall Street” are ready to provide financial “Instruments” like “Mortgaged Backed Securities” from Lloyd Blankfein , Jordon Belfort and the legion of predators who are now sending us into the next recession.
Maybe China, with their current 1.4 Trillion Dollars in debt, that we owe them, will bail us out and pick up a few more baubles when we hit the fu*kin skids again next year. The Washington Monument would bring a pretty penny and speaking of metaphors…
Taxes had a lot to do with it, but in terms of location, AMC will locate where the cost of doing business is lower, of which taxes are part of it, but not all of it. Years ago a competitor discovered oil on the family farm. Clark Rhodes died, and it was rumored at th he time that the inheritance taxes were hefty, especially with the increase in value of the family farm…millions. The discovery was some what sudden, as was the death. The Federal Government is rather intransigent concerning estate taxes…what to sell? The theaters, of course. CONGRATS TO ALL OF THE DURWOODS. Successful is the product of good management and good luck.
Two years ago, the short term interest rate for Treasuries went from 1.6% to 2.4% in two months time, a 0.8% increase, or more appropriately a 50% increase in the interest rate. While the FED does not have to mark to market, the Chinese do. In their short term holdings of Treasuries, they lost 1/3 of the value in two months. Lesson learned, don’t buy Treasuries. Buy US Equities, natural resources, and businesses, especially at depressed values. The US has a trade imbalance with China, and the Chinese surplus he to go somewhere. The Chinese do not have to comply with the SEC or NASD. They are a country. The missing data is the debt in the Chinese market said to approach 20 trillion. The difference, is in a socialist country like China, the debt is all government.
This was a great time to sell a chain of Theaters to the Chinese.
In my opinion, everyone in America is vastly underrating the effect that Oculus Rift and other devices in kind, will have on the Entertainment industry.
Paying cash to go and see 2D and 3D movies when content is available for these new devices will a tough sell. The Theater Industry feared the effects of Television 65 years ago and adjustments were made that ensured that folks would still show up to see first run movies in Theaters. This new device, as I understand it, will be a milestone, that will turn into a millstone around the necks of Theater owners who are not investing in new technology.
I’ll just bet there’ll be a bunch of folks from the Carmike office that won’t be needed in KC. Gotta love consolidation.