China's company to buy US movie theater chain AMC

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China's company to buy US movie theater chain AMC

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A Chinese company announced it will buy a major U.S. cinema chain, AMC Entertainment Holdings.

21 May,2012 12:34 pm

The company will spend $2.6 billion in Chinas biggest corporate takeover in the United States to date.Dalian Wanda Group Co.s purchase reflects the global ambitions of a wave of cash-rich Chinese companies that are using acquisitions to speed their expansion by obtaining foreign skills and brand names.Wanda said the deal will create the worlds biggest movie theater operator. The Beijing-based company said it will invest an additional $500 million to fund AMCs development. AMC operates 346 cinemas, mostly in the United States and Canada, and says it has 23 of the 50 highest-grossing U.S. outlets.We support AMC becoming bigger, not only in the United States but in the global market, said Wanda chairman Wang Jianlin at a signing ceremony for the acquisition.The deal reflects rising Chinese investment in U.S. corporate assets despite disputes between the two governments over trade and political issues such as this months diplomatic standoff over a blind Chinese legal activist. It is the largest-ever takeover of a U.S. company by a Chinese company.In terms of all Chinese corporate investments in the U.S., the deal is the third largest, according to financial research firm Dealogic. It ranks behind investments by Beijings sovereign wealth fund, the China Investment Corp., of $5 billion for a minority stake in Morgan Stanley and $3 billion in Blackstone Group LP, both in 2007.Chinese companies had invested $34.8 billion in the United States by the end of 2011 in industries including auto parts, agriculture and steelmaking, according to data compiled by economist Derek Scissors at the Heritage Foundation in Washington.Globally, outbound mergers and acquisitions by Chinese companies total $16.8 billion so far this year, up 6 percent from the same period last year, according to Dealogic.Wanda said AMCs headquarters will remain in the Kansas City area and day-to-day operations will not change. It said AMCs management would remain in place and staff numbers were not expected to affected. The company employs some 18,500 people.Wanda, founded in 1988 and privately owned, operates hotels, department stores, tourism and other businesses and says it had 2011 revenue of $16.7 billion. The company employs 50,000 people and its assets include 86 theaters in China.AMCs owners include Apollo Global Management, Bain Capital, the Carlyle Group, CCMP Capital Advisors and Spectrum Equity Investors.AMC has reported losses for the past three years but its CEO, Gerry Lopez, said it has returned to profit this year due to strong ticket sales.Wang, the Wanda chairman, said AMCs financial problems were due to the cost of servicing high debt. He said conditions should improve once an injection of Wandas cash allows it to pay off some of that.We are confident that after the merger, AMC will turn positive, he said. We have absolute confidence in the future of the company.