AMC rises 5 percent on IPO day
Called a watershed moment for China's top entertainment group
AMC Entertainment Holdings Inc (AMC), the movie chain controlled by China's second-richest man, closed higher in its first day of trading after raising about $332 million in an initial public offering.
AMC rose 5 percent in trading Wednesday on the New York Stock Exchange, closing at $18.90 per share.
A subsidiary of the Chinese entertainment company Dalian Wanda Group Corp Ltd (Wanda), AMC priced its offering of 18.4 million shares at $18 per share on Tuesday. The shares had been offered for $18 to $20 apiece.
Wanda - China's largest entertainment group - bought AMC in May 2012 in a $2.6 billion deal, including nearly $2 billion in debt. Wanda plans to keep an 80 percent stake in AMC.
Wang Jianlin heads Wanda and has served as chairman since 1989. He was China's richest man until Robin Li, founder of China's largest search engine, Baidu Inc, overtook him to become the richest Chinese man on the Bloomberg Billionaire Index. Li's net worth has increased by 65 percent, or $4.8 billion, to reach $12.23 billion so far this year as Baidu's shares rallied. Wang has seen his fortune climb by $2.9 billion to $12.16 billion this year.
Wang extolled AMC's listing as a watershed moment for the Wanda Group. "I'm glad to see AMC banners with 'A Wanda Group Company' displayed throughout the inside and outside of the New York Stock Exchange," Wang said in a statement on Wanda's website. "I believe this demonstrates the Wanda's growing influence overseas as China's biggest culture enterprise. "
AMC sought to file an IPO in 2007 and then again in 2010. The company pulled back on the first attempt due to poor market conditions, and in 2010 talks with Wanda cooled off before any public offering was made.
AMC has been in existence since 1920. From its origins in Kansas City, Missouri, the company has grown into more than 300 theaters throughout North America, making it the second-largest movie theater operator in North America behind Regal Entertainment Group.
According to Regal's website, the Tennessee-based company controlled close to 600 theaters as of November. Most of those locations are in major metropolitan markets, much like AMC's theaters.
Josef Schuster - founder of Ipox Schuster LLC, an independent financial-services firm in Chicago - sees AMC as a good buy for investors.
"It makes sense to include the company in a diversified portfolio," Schuster said. "The fact that it's up around 10 percent today reflects that investors believe there is some value there in the medium to long run. It has upside, but maybe after two or three years."
Brendan Ahern, a managing director at Krane Shares - a US-based asset management firm that delivers China-focused information to US investors - said that the focus for investors in AMC should be forward-thinking.
"AMC Entertainment stands to be the beneficiary of the holiday season, so it's probably a very apropos time for them to list," Ahern said Wednesday in an interview with China Daily. "There are certainly some challenges, but investors need to look at what the corporate strategy is going forward for AMC."
Dalian Wanda Group has holdings in a variety of enterprises, including commercial properties, luxury hotels and department stores. Wang announced this year that he plans to build the world's largest multiplex in China. Wang also said he plans to invest about $1 billion to build a five-star hotel in New York.
North American consumers represent the world's biggest film consumption audience, according to the Motion Picture Association of America (MPAA). In 2012, Canadian and US box offices accounted for $10.8 billion in ticket sales, a 6 percent uptick from the $10.2 billion generated in 2011.
China was the top international box office market with $2.7 billion generated in 2012.
jackfreifelder@chinadailyusa.com
