AMC continues consolidation with Nordic Cinema Group

The $929m deal will generate an IRR of 68% for investors in Bridgepoint’s fifth fund, it is understood.

US cinema chain AMC Theatres, which is backed by Chinese conglomerate Dalian Wanda, has agreed to acquire Nordic Cinema Group from private equity house Bridgepoint and Swedish media group Bonnier Holding, according to a statement.

The all-cash transaction values the cinema chain at SKr8.25 billion ($929 million; €868 million).

Citigroup Global Markets is providing debt financing for the transaction, with targeted leverage in the near-term of around 4.7x adjusted EBITDA, AMC said.

The transaction, which is subject to regulatory approval, is expected to complete before 30 June 2017.

Bridgepoint is offloading its stake in the cinema chain after a hold period of less than two years. The firm acquired the business using capital from the €4 billion Bridgepoint Europe V in April 2015 for SKr4.7 billion.

The sale – the first realisation from Fund V – is set to generate a money multiple of 2.5x and an internal rate of return of 68 percent for investors in the vehicle, it is understood.

Nordic operates 68 theatres and has a substantial minority interest in another 50 associated theatres to which it provides a variety of shared services. Its theatres hold the number one spot in market share in Sweden, Finland, Estonia, Latvia and Lithuania, and the number two spot in Norway, with a new theatre currently under construction in Norway and scheduled to open next year. It also has theatres in Denmark.

Nordic had approximately SKr.2.938 billion of revenue in 2015, including box office revenues of SKr.1.928 billion. Total revenues for the year ended 30 September, 2016 were SKr.3.159 billion.

Under Bridgepoint’s ownership Nordic opened five cinemas, including the first IMAX in the Nordic region, introduced premium seating, launched flexible pricing, and improved the food and drink offerings. Combined with a group-wide procurement project to deliver savings, Nordic’s EBITDA increased by 50 percent.

Following completion of the transaction, Nordic will operate as a subsidiary of Odeon Cinemas Group, which AMC acquired in 2016 from Terra Firma Capital Partners in a £921 million deal (€1.1 billion; $1.22 billion).

AMC expects to realize approximately $5 million of annual cost synergies from the acquisition, it said.

“For the third time in the past twelve months, we believe we have discovered a substantial acquisition that gives AMC yet another opportunity to further expand and diversify our geographic reach and more firmly establish AMC as the undisputed leader in movie exhibition worldwide,” AMC CEO and President Adam Aron said in a statement.

“AMC will bring additional efficiencies of scale and innovative strategic initiatives to the Nordic brands. At the same time, we will ensure that these theatres continue to be operated by locally-experienced theatre managers and country leadership teams who understand how to serve the communities and countries where they live and work.”

The combination with Nordic and its associated theatres cements AMC’s place as the largest cinema operator in the world, with 1,000 theatres and 11,000 screens in 15 countries, it said.

Citi is serving as exclusive financial advisor to AMC in the transaction. Pinsent Masons, Husch Blackwell, Weil, Gotshal & Manges, and Lindahl are serving as AMC’s lead legal advisors. Nomura International is exclusive financial advisor to Nordic, while White & Case and Mannheimer Swartling are serving as lead legal advisors.