Movie theatres to merge

It has been revealed that AMC Entertainment and Loews Cineplex Entertainment will merge into the second-largest chain of movie theaters in the United States.

Terms of the deal, which comes at a time when US movie attendance is at its lowest in nearly 10 years, were not made public, but when each company was purchased by separate groups of private equity firms in 2004, AMC cost JP Morgan Partners and Apollo Management $1.67 and Bain Capital, Carlyle, and Spectrum Equity Investors paid $1.46 billion for Loews.

AMC and Loews were already talking about a merger at the time they were purchased last year. The merger is expected to give the new company, which will be run by the current AMC chief executive, a better position in negotiating exhibitor’s rights with Hollywood studios.

It is also expected to bring cost cuts at a time when US movie ticket sales are down 11 percent from last year since the summer movie season began on May 6.

The group that owns AMC will control 60 percent of the new company, and the Loews group will control the remaining 40 percent, but once the deal is closed and regulators approve it, the company will likely be taken public next year.