Movie mega-deal for JP Morgan, Apollo

The two private equity firms will buy AMC Entertainment, a chain of theaters, for $1.67bn.

JP Morgan Partners and Apollo Advisors have agreed to buy AMC Entertainment, a publicly traded movie theater chain, for $2 billion (€1.65 billion), including the assumption of $399 million in debt.

The deal involves $1.67 billion in equity from the two firms and will be transacted through a new entity called Marquee Holdings. JP Morgan Partners, the private equity direct investment arm of JP Morgan, will own 50.1 percent of the newly private company. Apollo, which already has a stake in the company, will reinvest for the balance of the equity stake.

Public shareholders in the money-losing theater chain will receive $19.50 per share in the buyout – a 37 percent premium over the stock’s closing price on July 19.

AMC’s existing management team will remain in place, according to a press release. The company operates 232 theaters with 3,554 screens in North America, Europe and in Hong Kong.

The transaction is the most recent in a string of movie theater blockbuster deals. Last month, Boston’s Bain Capital agreed to acquire Loews Cineplex for $1.46 billion. In March, Chicago’s Madison Dearborn bought Cinemark for $1.6 billion.

In the 1990s, a number of private equity firms had disastrous experiences with movie theater investments. Famously, Kohlberg Kravis Roberts and Hicks, Muse, Tate & Furst lost $500 million each in Regal Cinemas.