QuickTake Q&A: AMC-Odeon Deal Puts Global Stamp on Your Matinee


A great idea for a movie about globalization: A U.S. theater chain controlled by a Chinese billionaire buys Europe’s largest cinema chain. It’s actually based on a true story. AMC Entertainment Holdings, purchased by Wang Jianlin’s Dalian Wanda Group in 2012, is now buying Odeon & UCI Cinemas Group to expand in Europe. It’s the largest sale of a U.K. company since British voters decided to leave the European Union.

1. How did we get here?

Odeon has been for sale longer than most used cars. Founded in 1930, Odeon calls itself “the largest and best-known cinema chain in the U.K. and Ireland,” and its 100-plus theaters include the landmark Odeon Leicester Square in London. Terra Firma Capital Partners, the U.K. private-equity firm founded by former Goldman Sachs executive Guy Hands, bought Odeon and UCI in 2004, merged them, and has been shopping the combined company to prospective buyers since 2011.

2. How was Brexit involved?

When news broke in May that AMC would bid for Odeon & UCI, the reported price tag -- as much as 900 million pounds -- was $1.3 billion. But the pound has plunged since British voters elected to exit the EU, making U.K. assets (relative) bargains for overseas investors. AMC will pay 921 million pounds, or $1.2 billion. Wanda, in a statement, attributed Brexit for the breakthrough in its three-year negotiations toward a deal.

3. What’s happening to the movie-theater business?

Theaters have been consolidating over the past decade, with chain owners swelling in size along with their multiplex movie houses. Smaller, family-operated businesses have been struggling, and selling. The big four chains in the U.S. -- AMC, Regal, Cinemark and Carmike -- have gobbled up independent operators in hopes that scale will help them deal with declining attendance. Exhibitors are trying to find new and better ways to get people into multiplexes as more consumers stay home and stream movies on their TVs and mobile devices.

4. How will this affect me?

Odeon and UCI will continue to operate under their current brand names. Their combined 242 theaters may be in for an amenity upgrade, however, since AMC has invested heavily in luxury seating in the U.S. For European audiences, better seating and food and drink await, in addition to IMAX-style large format screens. No word on how loyalty cards might be affected.

5. What’s next?

AMC says it “remains interested in and committed to” acquiring No. 4 U.S. theater chain Carmike Cinemas Inc., in a deal that has encountered resistance from Carmike shareholders. Others see the deal at risk. If the deal goes through as planned, AMC would surpass Regal as the world’s largest theater chain, with more than 600 locations. Wang, the new owner of AMC, has said he intends to own 20 percent of the global theater market by 2020.

The Reference Shelf

  • A QuickTake explainer on China’s shopping spree.
  • A QuickTake Q&A on how the U.K. and Europe might relate after their breakup.
    Before it's here, it's on the Bloomberg Terminal.