AMC, largest theatre operator in U.S., Europe
and globally, operates 1,000 theatres, 11,000 screens
AMC Entertainment Holdings, Inc. (NYSE:AMC) (“AMC”), the world’s
largest movie exhibitor, announced today it has completed its
acquisition of Stockholm-based Nordic Cinema Group Holding AB
(“Nordic”), the largest theatre operator in the Nordic and Baltic
countries. AMC completed the purchase in all-cash transaction of
SEK 5,756 million (USD $651.9 million), which includes payment
of interest on the equity value and repayment of shareholder
loans. In addition, AMC repaid indebtedness of Nordic of
approximately SEK 1,274 million (USD $144.3 million) and
indebtedness of approximately EUR €156 million
(USD $168.2 million) as of March 28, 2017. All amounts
have been converted into US Dollar amounts assuming an SEK/USD
exchange rate of .11326 and a EUR/USD exchange rate of 1.0783,
which were the exchange rates on March 23, 2017.
With Nordic added to its portfolio of theatre assets in Europe
and the U.S., AMC has hit the never-before-reached movie exhibitor
milestones of 1,000 theatres and 11,000 screens across the globe.
AMC now operates theatres in 15 countries, is the market leader in
nine of those, and is the largest operator in each of the U.S., and
Europe and worldwide.
Nordic will operate as a subsidiary of London-based Odeon
Cinemas Group, which AMC acquired in November of 2016. Jan
Bernhardsson, formerly President and CEO of Nordic Cinema Group,
has been promoted to become Chief Operating Officer of Odeon
Cinemas Group and Executive Vice President, AMC Europe. Jan will be
in charge of all the AMC controlled theatres across 14 countries in
Europe, and will report to Mark Way, Managing Director of Odeon
Cinemas and President, AMC Europe.
Nordic collectively has 68 theatres with 463 screens and
approximately 68,000 seats in nearly 50 large and medium-sized
cities in the Nordic and Baltic nations, and a substantial minority
investment (approximately 50%) in another 50 associated theatres
with 201 screens, to which it provides a variety of shared
services. Nordic theatres are number one in market share in Sweden,
Finland, Estonia, Latvia and Lithuania, and currently number two in
market share in Norway. With a new theatre scheduled to open next
year in Norway, Nordic is expected to increase market share to
number one here as well. Additional associated theatres also
operate in Denmark.
All Nordic activities are conducted locally in seven markets
under several brands, including SF Bio in Sweden, SF Kino in
Norway, Finnkino in Finland, and Forum Cinemas in Estonia, Latvia,
and Lithuania. Nordic had approximately SEK 2,938 million ($349
million USD)1 of revenue in 2015, including box office revenues of
SEK 1,928 million ($229 million USD)1. Total revenues for the
12-month period ended September 30, 2016, were SEK 3,159 million
($375 million USD)2 and operating margins for that 12-month period
exceeded those of AMC.
AMC purchased Nordic from European private equity firm
Bridgepoint and Swedish media group Bonnier Holding. The
transaction received antitrust clearance by the European Commission
on March 21, 2017.
The Combined Companies After Transaction Close
With the transaction now complete, Odeon Cinemas Group has 361
theatres and 2,926 screens in its European portfolio, including
theatres it directly operates and associate theatres. In addition
to its Nordic subsidiaries, Odeon also operates 243 theatres with
2,262 screens in its four primary markets: Odeon theatres in the
U.K./Ireland, UCI theatres in Italy and Portugal, UCI Kinowelt in
Germany/Austria, and Cinesa in Spain. Odeon Cinemas Group is the
largest operator in the U.K./Ireland, Italy and Spain, the number
two market share in Austria and Portugal and the number four market
share in Germany.
Transaction Rationale
- Highly
profitable circuit with minimal deferred capital
expenditures: Nordic theatres are highly profitable,
with attractive operating margins and free cash flow generation.
Nordic has a track record of multiple years of growth. Nordic’s
theatres generally are in excellent condition and the circuit has
been updated to like-new condition over the last few years.
Accordingly, capital expenditure needs going forward for the
existing theatres are expected to be modest.
- #1 Market
share leadership position: Nordic is the current market
share leader in five of the seven countries in which it operates,
including Sweden and Finland, and is the #2 exhibitor in Norway,
which are among the wealthiest countries in the world. The market
share position in Norway is expected to increase to #1 when a new
theatre opens in Oslo in 2018. Average market share across the
circuit now exceeds 50%.
- Strong value
proposition from a pipeline of development
theatres: Nordic currently has 10 theatres in active
development or re-development, across six countries, with most of
these expected to open in 2017 and 2018. These new theatres
represent a key valuation component underlying AMC’s acquisition
decision, as AMC believes these theatres will deliver significant
revenue and earnings growth.
- Extremely well
run company and able management team: Senior executives
in Nordic's highly capable and proven management team have two
decades of theatre experience and will join the well-regarded team
at Odeon Cinemas Group.
- Solidifies
AMC’s #1 position and expands global platform: The
Nordic acquisition enhances AMC’s position as the #1 movie
exhibition company in Europe going forward, and broadens and
diversifies AMC’s European platform. Adding Nordic to AMC creates
an established presence for AMC across 15 countries with
approximately 1,000 theatres and 11,000 screens and positions AMC
with substantial scale, diversification and growth
opportunities.
Comments
“This acquisition contributes immediately to AMC’s continuing
growth, furthers our geographic diversification and provides the
potential for significant future growth opportunities in key
European markets,” said AMC CEO and President Adam Aron. “A primary
motivation for this acquisition was the fact that Nordic is an
extremely well-run, modern and fast growing circuit. It is also an
important consideration that the leadership of Odeon will be
strengthened as talented leaders from the Nordic team, especially
including President and CEO Jan Bernhardsson, will assume
additional duties for AMC as we continue to build our
industry-leading European movie exhibition business. Clearly,
Europe will be a significant part of the AMC growth story, and AMC
looks forward to bringing to Europe the innovative theatre
experiences for which we are known in the U.S. to delight movie
fans across Europe."
Mark Way, Managing Director Odeon Cinemas Group and President,
AMC Europe, remarked, “Uniting the Odeon and Nordic teams brings
together some of the most experienced and respected cinema
operators in Europe. Our businesses are built on very similar
values of developing excellent cinemas, creating amazing
experiences for our guests, and offering fantastic careers for our
people. We’ll create a successful integrated business that delivers
further growth through market leading experiences for our
guests”.
Jan Bernhardsson, Chief Operating Officer of Odeon Cinemas and
Executive Vice President, AMC Europe, added, "I am excited to be
joining Odeon and AMC. The market leading positions of Odeon and
Nordic are already impressive, and together we will be even
stronger. The prospects ahead for AMC in Europe are ever so
bright."
Additional Details
- AMC expects to realize approximately $5
million of annual cost synergies.
- AMC will continue to be headquartered
in Leawood, Kansas. Adam Aron will continue to serve as Chief
Executive Officer and President, and Craig Ramsey will continue to
serve as Executive Vice President and Chief Financial Officer.
- AMC expects to maintain its current
quarterly dividend.
- Citi served as exclusive financial
advisor to AMC in the transaction. Pinsent Masons LLP; Husch
Blackwell LLP; Weil, Gotshal & Manges LLP and Lindahl served as
AMC’s lead legal advisors.
About AMC
AMC is the largest movie exhibition company in the U.S., in
Europe and throughout the world with approximately 1,000 theatres
and 11,000 screens across the globe. AMC has propelled innovation
in the exhibition industry by: deploying more plush power-recliner
seats; delivering enhanced food and beverage choices; generating
greater guest engagement through its loyalty program, web site and
smart phone apps; offering premium large format experiences and
playing a wide variety of content including the
latest Hollywood releases and independent programming. AMC
operates among the most productive theatres in the United States’
top markets, having the #1 or #2 market share positions in 22 of
the 25 largest metropolitan areas of the United States, including
the top three markets (NY, LA, Chicago). Through its Odeon
subsidiary AMC operates in 14 European countries and is the # 1
theatre chain in Estonia, Finland, Italy, Latvia, Lithuania, Spain,
Sweden and UK & Ireland.
Footnotes
1 SEK amounts have been converted to U.S. dollars at a rate of
SEK 8.430 = U.S. $1.00, which was the average exchange rate for
2015
2 SEK amounts have been converted to U.S. dollars at a rate of
SEK 8.420 = U.S. $1.00, which was the average exchange rate for the
twelve month period ended 9/30/16
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as
“forecast,” “plan,” “estimate,” “will,” “would,” “project,”
“maintain,” “intend,” “expect,” “anticipate,” “prospect,”
“strategy,” “future,” “likely,” “may,” “should,” “believe,”
“continue,” “opportunity,” “potential,” and other similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters. Similarly,
statements made herein and elsewhere regarding the completed
acquisitions of Odeon & UCI Cinemas Holdings, Ltd. (“Odeon”)
and Nordic Cinema Group Holding AB (“Nordic”) (collectively, the
“acquisitions”) are also forward-looking statements, including
management’s statements about effect of the acquisitions on AMC’s
future business, operations and financial performance, and AMC’s
ability to successfully integrate the acquisitions into its
operations. These forward-looking statements are based on
information available at the time the statements are made and/or
management’s good faith belief as of that time with respect to
future events, and are subject to risks, trends, uncertainties and
other facts that could cause actual performance or results to
differ materially from those expressed in or suggested by the
forward-looking statements. These risks, trends, uncertainties and
facts include, but are not limited to, risks related to: financing
the acquisitions, AMC’s ability to realize expected benefits and
synergies from the acquisitions; AMC’s effective implementation,
and customer acceptance, of its marketing strategies; disruption
from the acquisitions making it more difficult to maintain
relationships with customers, employees or suppliers; the diversion
of management time on transaction-related issues; the negative
effects of this announcement or the consummation of the
acquisitions on the market price of AMC’s common stock; unexpected
costs, charges or expenses relating to the acquisitions; unknown
liabilities; litigation and/or regulatory actions related to the
acquisitions; AMC’s significant indebtedness, including the
indebtedness incurred to acquire Odeon and Nordic and other
acquisitions; AMC’s ability to utilize net operating loss
carry-forwards to reduce future tax liability; continued
effectiveness of AMC’s strategic initiatives; the impact of
governmental regulation, including anti-trust investigations
concerning potentially anticompetitive conduct, including film
clearances and participation in certain joint ventures; operating a
business in markets AMC has limited experience with; the United
Kingdom’s exit from the European Union and other business effects,
including the effects of industry, market, economic, political or
regulatory conditions, future exchange or interest rates, changes
in tax laws, regulations, rates and policies; and risks, trends,
uncertainties and other facts discussed in the reports AMC has
filed with the SEC. Should one or more of these risks, trends,
uncertainties or facts materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those indicated or anticipated by the forward-looking
statements contained herein. Accordingly, you are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date they are made. Forward-looking statements
should not be read as a guarantee of future performance or results,
and will not necessarily be accurate indications of the times at,
or by, which such performance or results will be achieved. For a
detailed discussion of risks, trends and uncertainties facing AMC,
see the section entitled “Risk Factors” in AMC’s Annual Report on
Form 10-K, filed with the SEC on March 10, 2017, and the risks,
trends and uncertainties identified in its other public filings.
AMC does not intend, and undertakes no duty, to update any
information contained herein to reflect future events or
circumstances, except as required by applicable law, except as
required by applicable law.
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AMC Entertainment Holdings, Inc.AMC INVESTOR
RELATIONS:John Merriwether,
866-248-3872InvestorRelations@amctheatres.comorAMC MEDIA
CONTACT:Ryan Noonan,
913-213-2183rnoonan@amctheatres.comorODEON AND NORDIC:Simon
Soffe, +44 207 766 1809ssoffe@odeonuk.com
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