In the wake of the U.K. referendum to leave the European Union, one of the most immediate and dramatic economic effects has been the pound sterling dropping to a 31-year low against the US dollar. Overnight the value of the pound dropped from around $1.48 to $1.36, and has since slipped as low as $1.28. What this means for Americans is that right now is a great time to take a cheap vacation in the U.K., go shopping on U.K. retail sites... and acquire a major U.K. company.
For those in the U.K. film industry, the post-Brexit forecast has been worrying, since it means the loss of EU funding that provided subsidies for British filmmakers and helped to attract major productions from U.S. studios. It's still unclear whether the results of the referendum will prove to be disastrous or beneficial for the U.K. film industry in the long term, but news has now broken of the first major post-Brexit shift within the industry.
According to THR, AMC Entertainment has announced a definitive agreement to acquire the London-based Odeon & UCI Cinemas Group, which operates Odeon and UCI theaters and is the largest movie exhibitor in Europe. Ownership will be handed over from U.K.-based private equity firm Terra Firma at the approximate price of £921 million, or $1.2 billion, divided up as 75% cash and 25% stock consideration. The deal also includes the assumption of £407 million ($535 million) of net debt. The Odeon & UCI Cinemas Group operates 242 venues and 2,236 screens across Europe.
AMC Theatres CEO Adam Aron cited the dropping value of the pound in what he described as a "once-in-a-generation opportunity to acquire Europe’s leading cinema chain and create the world’s biggest and best theater operator."
"With this opportunistic transaction, AMC will be extending the reach of our proven guest experience strategies to transform the moviegoing experience for millions of moviegoers in Europe. Odeon & UCI is a great business with iconic brands, strong market presence and passionate teams, and their impressive recent transformation is just the beginning.
"While we acknowledge that there are some uncertainties related to Brexit, we are encouraged that current currency rates are highly favorable to AMC with the pound falling to a three decade low versus the dollar. In total, we believe this transaction will generate long-term value for our guests, our studio partners and our shareholders."
AMC Entertainment is itself a subsidiary of Chinese conglomerate The Wanda Group, which acquired the U.S. theater chain for $2.6 billion in 2012. AMC Theatres currently operates 344 venues and 4,960 screens across the U.S. and Canada, as well as locations in mainland China, and this acquisition will only further solidify the company's hold as a global powerhouse in film distribution. It remains to be seen, however, whether the acquisition will have a tangible impact on the moviegoing experience for audiences in Europe.