China’s Second-Richest Man Doubles Money on U.S. CinemasChristopher Palmeri
Wang Jianlin, China’s second-richest man, has seen the value of his controlling stake in AMC Entertainment Holdings Inc. more than double in 18 months, delivering a $900 million gain.
Wang, whose Dalian Wanda Group Co. operates the largest theater circuit in China, bought the No. 2 U.S. chain in August 2012 for $2.6 billion, including debt. He invested about $800 million, according to Gerry Lopez, chief executive officer of the Leawood, Kansas-based chain. Wanda’s 80 percent stake is now worth $1.7 billion at the current price of $22.53.
Lopez, 54, a former executive at Starbucks Corp., attributed the increase in AMC Entertainment’s market value since Wanda Group’s purchase to a record year for the U.S. movie industry in 2013, improvements in customer service and a rising stock market.
“When the grass is green, the baseball is played better,” Lopez said in a telephone interview after reporting fourth-quarter results, the first since AMC Entertainment became a public company again.
Wang, 59, has a net worth of $13.2 billion, according to the Bloomberg Billionaires Index. His interests include property development, a department store chain, tourism and hotels.
AMC Entertainment sold more than 21 million Class A shares for $18 each in an initial public offering in December, raising almost $380 million. The Class A shares have one vote each while Wanda’s Class B stock has three votes per share. The company was public until a 2004 buyout.
The company yesterday posted fourth-quarter net income of $279.6 million, or $3.62 a share. The results included a one-time, tax-related gain of $3.40 a share. Sales for the quarter rose 2.3 percent to $698.1 million. For the year, AMC Entertainment earned $364 million on revenue of $2.7 billion.
AMC rose 0.3 percent to $22.53 at 11:46 a.m. in New York. The stock had gained 9.3 percent this year as of yesterday.
Lopez plans to spend $245 million in each of the next three years, mostly to upgrade theaters with motorized, reclining seats, full-service restaurants and soda machines offering 120 flavors. The chain is expanding assigned seating, available for purchase in advance online.
That’s a change from the focus on financials under the company’s former private-equity owners including Apollo Global Management LLC and Bain Capital LLC.
“That’s the journey Wanda has helped us with,” Lopez said. “It’s all been a transformation about focusing on the guest.”
AMC has also negotiated better terms with suppliers because of its Wanda Group relationship, Lopez said. Wanda has expanded its large Imax Corp. screens in both countries, he said. Regal Entertainment Group, the largest U.S. movie chain, is 47 percent owned by Denver billionaire Philip Anschutz.
Wanda announced plans last year to invest more than $8 billion in a movie studio and theme-park complex in Qingdao, China.
“Having your 80 percent shareholder with a long-term view, being involved in not one segment, but all of the elements of the industry, that’s only good news for shareholders,” Lopez said.