E-commerce giant Amazon is exploring the possibility of buying the?world's largest movie theatre chain, AMC Theatres.
Shares of?AMC Entertainment?Holdings jumped as much as 21% yesterday following reports that Amazon was looking to buy the theatre chain.
Amazon founder Jeff Bezos has dispatched his investment advisers and top entertainment chiefs to explore acquisition plans for AMC, entertainment industry news website The Intersect reported, citing sources familiar with the discussions, as per a Reuters report. AMC is currently a struggling movie chain and was once a meme stock darling.
Amazon last year closed its $8.5 billion deal for MGM, adding the company behind "Rocky" and James Bond in a bid to beef up its Prime Video streaming service amid intensifying competition. For the unversed, Metro-Goldwyn-Mayer Studios, also known as Metro-Goldwyn-Mayer Pictures and abbreviated as MGM, is an American film, television production, distribution, and media company.
Movie theatres, as per the report, are struggling to draw in crowds since the lifting of pandemic restrictions, as rising costs force people to cut spending on out-of-home entertainment and spend more on groceries and rent.
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"We do not think that AMC is a likely acquisition target in general given its massive debt and inflated valuation," said US-based investment firm Wedbush Securities,?citing the cinema chain¡¯s massive $5 billion debt load amid Amazon's acquisition interest.
AMC had a total long-term debt of $5.17 billion, according to Refinitiv data. AMC's?shares ended 13% up today, with its market cap being $2.67 billion. AMC shares have been up 30% this year to date.
One of the famous "meme" stocks, AMC, was valued at more than $23 billion at the peak of the Reddit-fueled surge in June 2021. As per the Forbes report, analysts covering the companies characterise such a deal as far-fetched.?
If it wanted to build its brick-and-mortar movie presence in the U.S.,?Amazon would likely instead target a cheaper acquisition of Regal Cinemas locations after its parent company Cineworld filed for bankruptcy in September, Wedbush suggested.?
Now it remains to be seen how far Jeff Bezos' plan to acquire AMC goes, and whether the possible deal goes through or not.
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