AMC Theaters CEO Says He’s Focusing On Operations, But More Deals Are Possible

Is AMC Theaters still eager to snap up exhibition chains following its rapid-fire deals to buy Carmike Cinemas, Odeon & UCI Cinemas and — this morning — Nordic Cinema Group, making it the world’s No. 1 exhibition chain?

Perhaps, CEO Adam Aron told analysts today — although there’s “there is nothing in the hopper at the moment” and he’s “focusing on assimilation, not acquisition.”

If he sees a deal where the Wanda Group-controlled chain “can intelligently expand our company while being disciplined as to what we pay in price, we won’t shy away from M&A activity,” he says. “But it’s not as if we’re a one trick pony where M&A is the only thing we’ve done and that’s our big idea for the future.”

The AMC chief clearly relishes his company’s growing clout. He says that the chain is approaching “spitting distance” to become a Fortune 500 or Standard & Poors 500 company after it completes its acquisition of Nordic. The cash transaction is expected to cost $929 million, including the assumption of $319 million in debt.

The cut off to make the magazine’s list in 2015 was $5.1 billion in annual revenues. With AMC’s recent deals, and inflation, “we might already be there,” Aron says.

But he tried to assure investors the company’s eagerness to expand won’t result in deals, and debt, that will hurt its profit margins.

Raising the EBITDA margin “is more important than the next acquisition,” Aron says. He adds, though, that “if the right thing comes along, at the right time, at the right price, we’ll take a hard look.”

That could take the form of small, so-called tuck-in purchases to fill out the existing portfolio in Europe.

That would be “easy in Denmark, relatively easy in Norway, [and] hard to imagine in some of these other countries where we have 42% or 84% market share,” he says. “But there are a lot of countries in Europe. We’re still only the No. 4 player in Germany. We’re not present in France or the Benelux. We’re not present in Central Europe meaning Switzerland and some of the countries in Eastern Europe. I’m not telling you we have any grand desire to go there. I’m just saying Europe’s a big place” making small deals “very possible for AMC.”

Aron expects the European Union to provide a “painless and quick” approval for the Nordic deal by mid-year “ahead of the busy summer film slate.” The Scandinavian theaters are profitable, and Aron expects to see $5 million a year in savings and synergies.

But he was unable to offer up-to-date information because Nordic hasn’t finished its 2016 audit. “We understand it must be frustrating for some of you that there’s very little financial information on Nordic in the public domain, but nonetheless we are quite limited in what we can say about Nordic’s financials until their audit has been completed,” he says.

When the deal is done, AMC will have 1,022 theaters with 11,235 screens.

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