Market Insight

AMC Entertainment to acquire Nordic Cinema Group

January 24, 2017

Xin Zhang Xin Zhang Senior Research Analyst, Cinema, IHS Markit
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US circuit AMC Entertainment has entered into a definitive agreement to acquire Stockholm-based Nordic Cinema Group (NCG). AMC is to acquire NCG from European private equity firm Bridgepoint and Swedish media group Bonnier Holding in an all-cash transaction valued at SEK 8,250 million ($929 million). The deal is expected to be complete in the first half of 2017 and is conditional upon antitrust clearance by the European Commission.

As the leading cinema operator in the Nordic and Baltic region, Nordic Cinema Group operates 68 cinemas with 463 screens, and a substantial minority investment in another 50 associated or partly-owned theatres with 201 screens in Denmark, Norway and Sweden, to which Nordic provides a variety of shared services.  Nordic is present in seven markets and operates under several brands, including SF Bio in Sweden, SF Kino in Norway, Finnkino in Finland, and Forum Cinemas in Estonia, Latvia, and Lithuania. All are major players in their respective markets.

Under the agreement, Nordic will maintain a Stockholm headquarters location, and will operate as a subsidiary of London-based Odeon Cinemas Group, and will continue operating under its current brand names in each count.

Our analysis:

The sale of Nordic Cinema Group is another of AMC’s major acquisition in Europe after Odeon UCI (which was completed in November 2016). AMC is owned by China’s Dalian Wanda Group, which also owns screens in China (Wanda Cinemas), USA (AMC and Carmike), Australia (Hoyts) and Europe (Odeon UCI and now Nordic): all major exhibitors in their region and making Wanda the largest global cinema exhibition group. Upon completion, Wanda will control approximately 14,000 screens worldwide (8.8% of the world’s screens, less than has been quoted publicly). The deal takes Wanda another step closer to its ambition to hold a 20% market share of the global exhibition industry by box office.

AMC is clearly aiming for a geographical spread of acquired cinema chains. There are actually a limited number of appropriate circuits to acquire around the world, especially in the Scandinavian market and that are for sale, and NCG fits the bill of the size of circuit that AMC needs to build its global profile.

Wanda Group’s ambition is not limited to the exhibition side, with the group focusing on the whole entertainment value chain. Wanda has built the world's largest film production studio in China and acquired Legendary Entertainment, a US producer of blockbuster features, as well as assets in big data, entertainment marketing and gaming distribution. Wanda signed a strategic partnership with Sony Motion Picture Group in 2016, intending to involve in its future production projects.  Wanda has also expressed an intention to invest in a Hollywood studio.

In Wanda’s 2016 annual review, it witnessed the first decline in residential property sales in the past five years. However, revenue from culture division has tripled since 2012 and comprised more than a quarter of its total revenue in 2016, up from 18% in 2015. This partly explains Wanda’s aggressive expansion in the entertainment industry.  

Research by Market
Media & Advertising
Category
Cinema
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