By Barbra Murray, Contributing Editor
AMC Theatres, already one of the top three largest movie theater chains in the U.S., is about to grow even larger. The company has entered into a definitive agreement to purchase Starplex Cinemas for $172 million in cash.
AMC won’t just increase its footprint with the merger; it will increase its footprint in all the right places. By acquiring Starplex, AMC will grow with little geographic overlap. Additionally, it will improve the balance between its large-market presence and its existence in small- to mid-size markets, which, Gerry Lopez, CEO of AMC notes in a press release, “gives AMC broader movie genre appeal across a wider spectrum of guests.” The company is already a leader in some of the country’s leading markets, with a 44 percent share in New York and a 42 percent share in Chicago, according to a report prepared by investment bank and asset management firm Piper-Jaffray.
In terms of financing the acquisition of Starplex, which comes to the table free of debt, AMC will rely on its balance sheet and, if need be, borrowings under its existing revolving credit facility. When all is said and done, AMC will have expanded its portfolio from 347 locations and 4,972 screens, to approximately 380 theaters and 5,300 screens. It will still, however, be second to Regal Entertainment, which remains the largest movie theater chain in the U.S. with more than 7,000 screens.
If all goes as planned, the transaction will close by the end of 2015.