Wanda Group creates global film powerhouse, AMC acquires Europe's Odeon & UCI Cinemas
12.07.2016
On July 12, Dalian Wanda Group's AMC Entertainment Holdings Inc. announced the acquisition of Europe's largest cinema chain - Odeon & UCI Cinemas Group – for GBP921 million, or approximately nine times earnings before interest, taxes, depreciation and amortization (EBITDA). The acquisition is AMC’s biggest move following its announcement to acquire Carmike Cinemas. It is also Wanda’s first-ever investment in a European cinema chain and is a move aimed at building Wanda as a global film conglomerate.
Odeon & UCI has 242 cinemas and 2,236 screens. Most of its cinemas are located in prime areas of major European cities. Revenue for the last 12 months amounted to approximately USD1.156 billion, accounting for some 20% of the European cinema market. It holds the largest market share in major European countries.
Wanda's acquisition of Odeon & UCI began three years ago, with multiple rounds of difficult negotiations, many of which failed due to pricing. A new opportunity arose because of the Brexit referendum, resulting in both parties finally reaching an agreement.
Once AMC's acquisition of Odeon & UCI receives EU approval, Wanda will become a global cinema power. The Wanda Group will become a market leader in three of the world’s major film markets—North America, China and Europe—and will gain an absolute advantage as the world’s largest cinema chain operator.
Three years ago, Wanda set a goal to obtain 20% of the global film box office by 2020. Acquiring Odeon & UCI has enabled Wanda to take a big step toward this objective.
Creating a global cinema business will significantly increase Wanda’s voice and influence in the global film industry. It will also mean that the structure of the world’s cinema market is about to change.
In the past, only the six major Hollywood film studios have had the ability to distribute film globally. By controlling the end of the film industry chain, Wanda is taking a step forward to become the sole non-US worldwide film distributor.
This will help accelerate the development of Wanda's film production and distribution segments, making the Wanda Group a leader in the global film industry.
The acquisition will also benefit Odeon & UCI considerably. Wanda, a tremendously strong company, has a long-term strategy to develop the film industry, and the company aims to create greater value through long-term operations. This is not a short-term investment.
After the acquisition, Wanda will increase its investment in Odeon & UCI and upgrade cinema equipment, effectively helping Odeon & UCI raise viewing experience and operating results, as well as increasing local employment and tax revenue.
AMC CEO and President Adam Aron said that the acquisition was conducted in British Pound, hence the volatility of the British Pound will not have an impact on the acquisition. The low British Pound benefits AMC's buy. AMC's management is very positive about the growth prospects of Odeon & UCI and is very confident about the acquisition. They believe that they have the ability to significantly increase the revenue and earnings of Odeon & UCI.