AMC Entertainment, a Kansas City fixture since 1920, has been purchased by a Chinese firm for $2.6 billion to create the worlds biggest movie theater operator.
The firm will remain headquartered in the Kansas City area a new headquarters building is being built in Leawood but the deal unites the No. 2 theater chain in the largest market, the United States, with the biggest player in China.
Wandas move underscores the growing ties between the U.S. and Chinese film industries, which benefited from a slew of cross-Pacific deals this year.
Gerry Lopez, CEO and president of AMC, said Sunday night the deal, which includes a $500 million investment from the Wanda Group to fund AMCs strategic and operating initiatives, opens new opportunities for the firm.
As the film and exhibition business continues its global expansion, the time has never been more opportune to welcome the enthusiastic support of our new owners, Lopez said in a statement. Wanda and AMC are both dedicated to providing our customers with a premier entertainment experience and state-of-the-art amenities and share corporate cultures focused on strategic growth and innovation.
Wanda plans to spend the $500 million on reducing debt and improvements to the AMC theaters, Lopez said. Those include upgrading more theaters to show Imax and 3-D movies, and adding more dining options and bars.
Wanda Group is one of Chinas largest real-estate companies, with interests in luxury hotels and department stores. It is Chinas largest cinema operator, with 86 locations.
David Brain, president and chief executive of Entertainment Properties Trust, which has developed theaters throughout North America for AMC since 1997, said the purchase by Wanda ends a period of uncertainty for AMC. The firm had been owned by an investment group since 2004 that had been seeking to sell its interest for some time.
The change from financial ownership orientations thats been ongoing for a number of years to a strategic ownership with a very long-term interest is a good thing, Brain said.
The cinema chain withdrew plans for an initial public offering in 2008, and filed a second time, in July 2010, seeking to raise as much as $450 million. AMC has been in intermittent discussions with Wanda Group since shortly after the 2010 IPO filing, Lopez said. AMC also held talks with other buyers, including private-equity firms.
Brain said that Wanda Group, a comparative newcomer in the movie exhibition business, will benefit from AMC deeper and stronger connections to the film industry.
Wanda had very big ambitions and China will be a huge growth market for many years, Brain said. AMC has a reservoir of experience and talent and experience in film buying on a world-wide basis.
AMCs roots in Kansas City began when Durwoods father, Edward Dubinsky, leased his first movie theater in downtown Kansas City in 1920, the year his son was born.
Durwood, who invented the megaplex movie concept in 1962, not only built up AMC, but was deeply engaged in trying to revitalize downtown.
He worked more than 30 years to create a downtown entertainment district, and was actively pursuing the original Power & Light District concept when he died in 1999.
While the new ownership represents a global leap for AMC, it evolved from its hometown roots when it was sold in 2004 for about $1.7 billion to a group that included the Apollo Investment Fund, J.P. Morgan Partners, Bain Capital Investors, the Carlyle Group and Spectrum Equity Investors. Apollo and J.P. Morgan each own about 39 percent of the company.
AMC lost its last direct connection to Durwood when Peter C. Brown, an 18-year veteran of the company who had been its top executive for 10 years, retired in 2009 and was replaced by Lopez, who came from Starbucks Corp.
AMC has been very active in the Kansas City market over the past few years, including an announcement last fall that it was moving its headquarters and 450 employees from downtown Kansas City to the Park Place development in Leawood.
The firm also forged a $60 million joint venture with the Cordish Co. in 2005 that led to the redevelopment of the historic Mainstreet and Midland theaters downtown.
As for the new headquarters, a move fueled by a reported $47 million incentive package from Kansas, both the landlord and the state have said their interests will be protected. A groundbreaking ceremony for the new $30 million AMC headquarters was held last month.
Bloomberg News Service and The Associated Press contributed to this report.