Amazon Could Be Looking to Purchase AMC Theaters
Wall Street was abuzz with the news this morning that Amazon may be considering a buy out of AMC theaters. This caused AMC stocks to soar today with increases of nearly 45% in early trading and topping out at more than $5.80 today.
As MovieWeb acknowledges neither company has confirmed the speculation. The rumor surrounding the possible buyout came from The Daily Mail which said that AMC (which has theaters at both Disney Springs and Downtown Disney) had been in talks with Amazon about a takeover after theaters have been hit hard during the COVID-19 shutdown.
As MovieWeb points out, AMC is currently on the brink of bankruptcy. Amazon or any other potential buyer could expect bargain prices for picking up the company. AMC’s market cap at the moment sits around the $400 million mark. This is a stark contrast to the $2.6 billion price tag the Chinese Dalian Wanda group paid for the company back in 2012. However, it should be noted that since that time AMC did manage to by back about $600 million of its own shares.
To avoid bankruptcy during the COVID-19 pandemic, AMC raised $500 million in debt round so that the company could maintain liquidity through the Fall of 2020.
During a recent investor’s call, Jeff Bezos said that his company generated an additional $4 billion in the last quarter and the company will begin to ramp up spending. This tidbit of information could mean a couple of things, the first is that it may just mean that Amazon is looking to beef up safety for existing employees which will cost the company. The other is that Bezos is looking to take advantage of the crisis to snap up companies that have been hit hard during the economic crisis.
So why would snapping up cinemas be a good idea for Amazon? The Amazon Prime streaming network was the very first to win an Academy Award (Manchester by The Sea) back in 2017. A requirement to be an Oscar contender is that films must be on the big screen if only for a limited run. The Academy relaxed these rules during the pandemic but they are likely to be revert back to this original requirement once theaters have reopened. Having a stake in the theater business may make it easier for Amazon’s production studios in the future.
This may be more appealing to Amazon than you would think. Previously Amazon looked at purchased Landmark. Though the deal fell through.
MovieWeb reminds us that any potential deal between AMC and Amazon is speculation at this point. This is a story that we’ll continue to follow here her at MIckeyBlog and we promise to keep you posted.