PE giants exit AMC to Chinese investor

Amid these lofty ambitions, it is easy to forget that the AMC sale represented a much-needed exit for the firm's five private equity owners who had held the asset for eight years.

Back in 2004, when the US economic climate was markedly different, Apollo Global Management and J.P. Morgan's private equity unit (now known as CCMP Capital Advisors) completed a $2 billion buyout of AMC. One year later, the company merged with Loews Cineplex Entertainment, a cinema chain owned by Bain Capital, The Carlyle Group and Spectrum Equity. The three firms had bought the asset from Onex and Oaktree Capital Management in 2004 for $1.5 billion.

The merged entity became North America's second-largest cinema operator. Apollo and CCMP held 60% of the business with Bain, Carlyle and Spectrum in possession of the remaining 40%.

Although AMC is expected to turn a profit in 2012 due to stronger ticket sales, the past few years have seen a string of losses. This hampered the private equity firms' exit plans; attempts to float the business in 2008 and 2010 both floundered. With the funds approaching the end of their investment cycles, Wanda entered the fray.

Merger talks started in July 2010 and the protracted negotiations suggest the parties originally had very different valuations in mind. The private equity investors reportedly ended up earning $500 million on the deal, which isn't much to show for an eight-year holding period, given the size of the asset.

"It's a win-win transaction; Wanda has growth objectives both within and outside China," says Eliot Merrill, a managing director at Carlyle who sits on the AMC board. "We invested for the long-term but ultimately our investors expect an exit. The fact that Wanda is a Chinese company does not concern us and they are a logical next investor in AMC."

Wanda, which has $16.7 billion in annual revenue, focuses on commercial properties, including cultural businesses, notably 86 movie theatres with a total of 730 screens. It sees the AMC acquisition as a vehicle for wider US exposure.

"We can leverage their [AMC's] experience to help replicate aspects of their operating model in high-growth markets such as China," Wanda tells AVCJ. "AMC can also be a platform for Wanda to eventually expand in the US in other sectors, for example in commercial property development, hotels, retail or other activities."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Consumer
• Media
• Exits
• North America
• Greater China
• China
• USA
• Media
• Exit
• Bain Capital Asia
• The Carlyle Group
• JPMorgan Chase & Co
• Oak Investment Partners