×
You will be redirected back to your article in seconds

Lear near unloading Act III theater chain

NEW YORK — Norman Lear is moving toward the sale of his Act III Theatres Inc., the 10th-biggest exhibition company, in a deal Wall Streeters believe could fetch as much as $550 million.

Lear, who owns 68% of Act III, has hired investment bank Donaldson Lufkin & Jenrette to advise on the exhibitor’s strategic alternatives, sources said. DLJ has begun distributing a briefing book on Act III to interested companies.

People close to Act III believe the former television producer, who recently turned 75, has estate considerations on his mind and wants to ensure his shareholding in the exhibition company can be more easily sold than under the current structure. Act III execs declined comment.

But while Lear may be motivated by personal issues, he could get the benefit of a trend toward consolidation in the exhibition industry. Sony Corp.’s theater unit and Cineplex Odeon Corp. currently are negotiating a merger that will create an industry giant dominating the New York market.

Act III operates 673 screens in 122 theaters, clustered in the Pacific Northwest, Texas and Nevada. Investment bankers say the company is likely to be hotly pursued, with potential buyers including foreign exhibitors, U.S. majors such as Regal Cinemas and financial investors.

Regal execs did not return calls seeking comment, but the company has been an aggressive acquirer of smaller exhibitors. Investment bankers said foreign buyers could include Greater Union of Australia.

Some bankers said AMC Entertainment could be a buyer, but a spokeswoman for AMC Entertainment said acquisitions “are not part of our growth strategy.” It’s also not clear whether AMC has the financial resources to do such a big deal.

An outright sale is only one option Lear is likely to consider, sources said. Other alternatives include a public stock offering, bringing in a partner or arranging a private placement of new equity by an institutional investor. Institutional investors already own part of the 32% of the stock not owned by Lear.

Lear is likely to pick whichever option can raise the most money, of course, although some Wall Streeters say taxes will be an issue. That reduces the chance Lear will go for an outright cash sale; he may prefer to sell to a company that could issue stock, which reduces taxes.

Whatever happens, Lear wants to improve the liquidity of his holding, which likely will be worth at least $100 million. Bankers say Act III likely will be valued at seven to nine times earnings before interest, taxes, depreciation and amortization, which was $59 million in 1996.

That puts a range of $413 million to $531 million on Act III. The exhibitor had about $273 million in long-term debt as of March 31, according to a recent Securities & Exchange Commission filing, so the value of the stock outstanding is $140 million to $258 million.

One banker said Act III owns more real estate than usual for exhibitors, which will enhance the value of the company. But another said high-priced sales of exhibition companies had not done well in the past, pointing to the leveraged buyout of United Artists Theater Circuit five years ago.

More Film

  • Agustina San Martin Talks Cannes Special

    Agustina San Martin Talks Cannes Special Mention Winner ‘Monster God’

    CANNES – An exploration of the ramifications of God, “Monster God,” from Argentina’s Agustina San Martín, took a Special Mention – an effective runner’s up prize – on Saturday night at this year’s Cannes Film Festival short film competition. It’s not difficult to see why, especially when jury president Claire Denis own films’ power resists [...]

  • Atlantics

    Netflix Snags Worldwide Rights to Cannes Winners 'Atlantics,' 'I Lost My Body'

    Mati Diop’s feature directorial debut “Atlantics” and Jérémy Clapin’s animated favorite “I Lost My Body” have both been acquired by Netflix following wins at Cannes Film Festival. “Atlantics” was awarded the grand prix while “I Lost My Body” was voted the best film at the independent International Critics Week. The deals are for worldwide rights [...]

  • Stan Lee, left, and Keya Morgan

    Stan Lee's Former Business Manager Arrested on Elder Abuse Charges

    Stan Lee’s former business manager, Keya Morgan, was arrested in Arizona Saturday morning on an outstanding warrant from the Los Angeles Police Department. The LAPD’s Mike Lopez confirmed that the arrest warrant was for the following charges: one count of false imprisonment – elder adult; three counts of grand theft from elder or dependent adult, [...]

  • Moby attends the LA premiere of

    Moby Apologizes to Natalie Portman Over Book Controversy

    Moby has issued an apology of sorts after writing in his recently published memoir “Then It Fell Apart” that he dated Natalie Portman when she was 20 — a claim the actress refuted. “As some time has passed I’ve realized that many of the criticisms leveled at me regarding my inclusion of Natalie in Then [...]

  • Bong Joon-ho reacts after winning the

    Bong Joon-ho's 'Parasite' Wins the Palme d'Or at Cannes

    CANNES — The 72nd edition of the Cannes Film Festival wrapped with jury president Alejandro González Iñárritu announcing the group’s unanimous decision to award the Palme d’Or to South Korean director Bong Joon-ho for his sly, politically charged “Parasite.” Following last year’s win for humanistic Japanese drama “Shoplifters,” the well-reviewed Asian thriller represents the yin [...]

  • Invisible Life Brazilian Cinema

    Cannes Film Review: 'The Invisible Life of Eurídice Gusmão'

    A “tropical melodrama” is how the marketing materials bill “The Invisible Life of Eurídice Gusmão.” If that sounds about the most high-camp subgenre ever devised, Karim Aïnouz’s ravishing period saga lives up to the description — high emotion articulated with utmost sincerity and heady stylistic excess, all in the perspiring environs of midcentury Rio de [...]

  • Best Movies of Cannes 2019

    The 10 Best Movies of Cannes 2019

    The Cannes Film Festival is too rich an event to truly have an “off” year, but by the end of the 72nd edition, it was more or less universally acknowledged that the festival had regained a full-on, holy-moutaintop-of-art luster that was a bit lacking the year before. It helps, of course, to have headline-making movies [...]

More From Our Brands

Access exclusive content