As AMC considers bankruptcy, Amazon may snap up the company
Amazon.com (AMZN) has held talks to acquire the troubled movie chain AMC Entertainment Holdings (AMC), but it is unclear if the discussions are still active, Jamie Nimmo of Daily Mail reports, citing sources.
The companies are thought to have held talks about a potential takeover of AMC by Amazon, the sources said.
Buying a cinema chain would enable Amazon to control the screening of films, giving it greater dominance of the industry. Amazon’s interest in cinemas is not new.
In 2018, Amazon looked at buying American arthouse cinema chain Landmark Theatres, but lost out to the eventual buyer, Cohen Media Group. Netflix was also reportedly in the running to buy Landmark.
However, a takeover of AMC would be on a different scale as Landmark only had about 250 screens in the US, while AMC has about 1,000 around the world.
Amazon certainly has the means to buy AMC, whose stock market value has collapsed in recent years to just $420million.
In a sign of bad times in the movie business, earlier this month AMC Theatres (AMC) sent a letter to Universal Studios (CMCSA) chairman Donna Langley, saying that, going forward, AMC will not license any Universal films in any of its 1,000 globally effective immediately.
Amazon bought supermarket chain Whole Foods Market in 2017 in a sign that the company was willing to spend money buying non-web-based companies.
AMC was bought by Chinese conglomerate Dalian Wanda for $2.6 billion in 2012, but it bought back $600 million worth of shares in 2018 after Beijing cracked down on overseas investments by Chinese companies.
Under Wanda, AMC launched a major expansion plan, and in 2016 bought Odeon in the UK for £920 million from British financier Guy Hands’ private equity firm, Terra Firma, and US group Carmike Cinemas for $1.1 billion.
The deals turned AMC into the world’s largest cinema company, with 1,000 outlets and 10,000 screens around the world.
However, the expansion plan backfired and left AMC saddled with debts that are now close to $ 5billion. Last month, AMC raised $500 million from bond investors in an effort to stay afloat during the crisis.
However, investors still questioned whether AMC could avoid bankruptcy, given its parlous financial state.
A group of AMC’s lenders reportedly hired lawyers to advise on restructuring options last month, underlining AMC’s financial strife.
In Monday’s pre-market trading, AMC shares are up 70% to $7.00. AMZN closed at $2379.61.
STOCKWINNERS
To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Regretting that I didn’t buy AMC stock at this time. They seem to be bouncing back.