Mar 28, 2023
AMC Rises on Report Amazon Weighs Offer for Theater Chain
(Bloomberg) -- AMC Entertainment Holdings Inc. rose 13% after the Intersect website reported that Amazon.com Inc. is weighing a possible acquisition of the struggling movie-theater chain.
Amazon has investment advisers looking at a possible takeover of the chain, which has a market value of about $4 billion, the site reported.
Shares of AMC, the world’s largest theater chain and a popular meme stock, closed at $5.15 in New York after rising as much as 21%. The company has struggled financially as consumers have returned slowly to cinemas following the Covid-19 pandemic.
AMC isn’t the only ailing chain. Cineworld Group Plc, another major theater operator, is expected to emerge from bankruptcy in June. It operates the Regal cinemas in the US.
“Amazon would be better off buying a piece of Cineworld,” Wedbush Securities analyst Alicia Reese wrote in a research note, saying that would be a lower-risk strategy. “We do not think that AMC is a likely acquisition target in general, given its massive debt and inflated valuation.”
AMC shares also jumped in 2021 on speculation of an Amazon acquisition that never materialized. At the time, the chain was swept up in a Reddit-inspired mania that sent its stock soaring.
AMC theaters could serve as a platform for the 12 to 15 movies Amazon plans to release in cinemas annually, the website said. Bloomberg News reported last year that Amazon is planning an ambitious slate of films. Apple Inc. is also ramping up output.
AMC and Amazon didn’t immediately respond to requests for comment.
(Updated with analyst’s comment in fifth paragraph.)
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