Shareholders savor as AMC goes private

$2 bil deal closed Thursday

HOLLYWOOD — It was a good year for the public stockholders of exhib chain AMC Entertainment, who saw their stock jump 28% on the year as the company was sold off to a private investment partnership.

The $2 billion deal that took the nation’s second-largest exhib circuit private closed Thursday, following approval by AMC stockholders at a special meeting held in Leawood, Kan. Owners of the company’s common shares will receive $19.50 cash per share.

New owner of the exhib, which will continue to operate under current management, is Marquee Holdings, controlled by affiliates of J.P. Morgan Partners, the private equity arm of JPMorgan Chase & Co., and Apollo Management, a private investment firm that had been the controlling stockholder in AMC.

The AMC sale was announced in July, following the breakdown of merger talks early in the year between AMC and Loews Cineplex that were intended to create a rival to 6,000-screen industry leader Regal Entertainment. It was the third major exhib sale of the year. Investors led by Bain Capital bought Loews Cineplex, the No. 4 chain, in June for $1.46 billion. Madison Dearborn Partners bought Cinemark, the No. 3 exhibitor, for $1.6 billion in March.

The exhibitor industry has shaken off the ill effects of an overbuilding boom in the 1990s that eventually brought many chains into bankruptcy court. Those circuits were snapped up by strategic buyers, who are now selling off to a second round of financial players. Buyers such as Marquee will probably try to increase equity through cost-cutting and enhancing revenue streams, then cash out with new IPOs in a few years.

AMC operates 231 theaters with 3,560 screens in the U.S., Japan, Canada, Hong Kong, the U.K. and Europe.

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