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Kkr To Acquire Act Iii Theater Chain In $660 Million Transaction

From Staff And Wire Reports

Kohlberg Kravis Roberts & Co. announced Monday it will acquire the Act III Cinemas chain for $660 million, ending more than two months of sale rumors.

The Portland-based theater chain is privately owned by television producer Norman Lear and others. It operates 124 theaters with 733 screens in Oregon, Washington, Alaska, Idaho, Missouri, Nevada and Texas.

ACT III monopolizes the Spokane and Coeur d’Alene market, with 10 movie houses ranging from discount cinemas to the brand new Spokane Valley 12-plex.

Hal Gaba, ACT III’s chief executive officer, said he doesn’t expect cinema operations in this market to change.

“They’re buying the company as it presently exists and operates,” Gaba said. “I think it’ll pretty much be life as before.”

A sale had been expected since August, when Act III disclosed in its quarterly filing with the U.S. Securities and Exchange Commission that it had hired a financial adviser to consult about a potential sale.

Act III does not trade stock publicly, but it must file reports with the SEC because it does have publicly traded debt.

“Act III is one of the best-performing exhibition companies in the country and has a leading position in a number of very attractive, high-growth markets,” said Clifton Robbins, a KKR partner.

A Hollywood trade newspaper had said last week that the New York investment firm wanted to combine Act III with United Artists Theatre Circuit to create what would be one of the world’s largest theater chains.

Gaba said the purchase will give the chain the financial strength to accelerate growth.

Act III had acquired about 80 percent of the movie screens in the Portland metropolitan area since moving into the city in 1989, the same year KKR made corporate history with a $25 billion purchase of RJR Nabisco Inc., the largest U.S. merger.

KKR also took the Portland-based Fred Meyer retail chain private in a $420 million deal in 1981, but later sold its stake in the company. Act III reported net income of $5.8 million in 1996 on sales of $223.5 million.

, DataTimes