China’s largest movie theater operator just bought AMC Entertainment Holdings for $2.6 billion. But it still has M&A on the brain and plans to spend another $30 billion on acquisitions in the next couple years.
Today I’m looking at four publicly traded theater chains that could soon find themselves in the sights of this Chinese suitor. Watch the video for the details!
P.S. Buying potential takeover targets is just one way to profit from the great — and growing — Asian consumption machine. With its consumers’ near-obsession with American products, it only makes sense that Asian companies will want their own piece of the investing action.
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Hi, this is Tony Sagami for Uncommon Wisdom Daily.
The summer movie season officially ended on Labor Day, but it brought us some memorable blockbusters. “The Avengers” brought in a record $207 million in its opening weekend, and went on to gross $1.5 billion total, making it the third-most-successful film in history, behind only “Titanic” and “Avatar.”
Other big summer hits, including “The Dark Knight Rises,” “Men In Black 3” and “The Amazing Spiderman,” helped the industry rake in a whopping $4.27 billion in ticket sales. And that’s not even counting the popcorn!
Clearly, movies are big business. And that fact hasn’t escaped some of the biggest international names in the industry, such as China’s privately owned Wanda Group.
The country’s largest movie chain recently completed a $2.6 billion purchase of AMC Entertainment Holdings, with its network of 4,900 movie theaters.
But Wanda Group isn’t satisfied. CEO Wang Jianlin said the acquisition of AMC is just the first step, and the company plans to invest another $30 billion on foreign acquisitions in the next decade.
If you’re an investor, a statement like that should set off alarm bells. After all, takeovers usually pay off big time for investors who hold shares of the target company. And one of the best ways to find these potential takeover targets is by focusing on companies like the Wanda Group that have a stated acquisition strategy, and the cash to follow through. And then you find out where they’re looking to spend that cash.
In this case, there are several possibilities for takeover targets among publicly traded U.S. companies. They include Regal Entertainment Group, Cinemark Holdings, Carmike Cinemas and IMAX Corporation.
Of course, there are never any guarantees in the investment business, but I strongly suspect that one or more of these theater chains will soon find itself in the sights of a Chinese suitor.
And it’s not just me. Even the CEO of IMAX himself says that “this is just the beginning of a global trend.” Richard Gelfond predicts that “you’re going to see much more of a consolidation of the entertainment business worldwide.”
Keep in mind, this M&A activity in the movie industry is just one example of the insatiable appetite of Chinese companies. If you’re my age or older, it may remind you of the Japanese spending spree in the 1980s, when investors from that country bought landmark assets such as the Pebble Beach golf course and Rockefeller Center.
The Chinese, however, have much deeper pockets than the Japanese, and they’re going to spend that money in a big way. Getting in front of their buying is a great strategy for making a pile of fast money.
I’m Tony Sagami for Uncommon Wisdom Daily. Thanks for watching.