AMC, Loews to merge
KANSAS CITY, Mo. — Movie theater chains AMC Entertainment Inc. and Loews Cineplex Entertainment Corp. said Tuesday they plan to merge, and will be led by current AMC Chairman, CEO and President Peter C. Brown.
The new company will be called AMC Entertainment Inc. and will be headquartered in Kansas City. The combined entity will own, manage or have interests in about 450 theaters in 30 states and 13 countries. An integration committee will be formed in which Travis E. Reid, president and CEO of New York-based Loews Cineplex, and Brown will serve as co-chairs.
The merger agreement also provides for the merger of AMC’s and Loews’ holding companies. In late 2004, a group of private investors purchased AMC, the nation’s second-largest theater chain, for about $2 billion. Bain Capital, Carlyle Group and Spectrum Equity Investors acquired Loews Cineplex from Onex Corp. and Oaktree Capital Management in 2004 for $1.5 billion.
Michael L. Savner, an analyst with Banc of America Securities, said in a research note that the merger “makes sense … given the similar urban focus of both companies and the benefits that can be achieved through economies of scale.”
Savner said the nation’s largest movie theater chain, Regal Entertainment Group, and the third-largest chain, Carmike Cinemas Inc., focus on different markets than AMC and Loews, so he does not expect “meaningful competitive implications.”
And although Hollywood has been experiencing its longest box-office decline in 20 years, Savner said he expects trends to improve in the second half of the year.
AMC spokeswoman Pam Blase said the industry always has ups and downs.
“It’s safe to say we’re in a down cycle right now, but it will go up again and we will be there with a very strong company,” Blase said.
She could not say if the merger would result in theater closings or layoffs, saying those details would be determined in the next several months.
Marquee Holdings, which is controlled by JP Morgan Partners and Apollo Management affiliates, will continue as the holding company for the merged businesses. Bain, Carlyle and Spectrum — stockholders of LCE Holdings — will own about 40 percent of the new holding company.