AMC Entertainment Holdings Inc. jumped as much as 56% on a media report that Amazon.com Inc. has discussed a potential takeover of the largest U.S. movie-theater owner.
It’s unclear if the talks are active or will lead to a deal, the U.K.’s Mail on Sunday newspaper said, citing unidentified sources. AMC and Amazon didn’t immediately respond to requests for comment Monday.
AMC shares rose as much as $2.31 to $6.41 in premarket trading, and were up 41% to $5.76 at 9:37 a.m. in New York. The stock was down 43% this year through Friday, battered along with the rest of the cinema industry by a worldwide shutdown for the coronavirus pandemic.
The reported talks are unlikely to spark a price war for AMC, Bloomberg Intelligence media analyst Amine Bensaid said in a note. “Movie-going is unlikely to fully bounce back in a post-Covid-19 world and may create risks for an acquirer,” he said. “AMC’s elevated debt load and unavoidable fixed costs means the company’s near-term financial flexibility will be severely challenged.”
AMC showed its concern about existential threats with its reaction to last month’s straight-to-streaming release of the kids movie “Trolls World Tour,” which Comcast Corp.’s Universal Pictures crowed about as a high-grossing success. AMC said it would no longer show Universal’s movies.
Along with its vast retail and web-services operations, Amazon is an active player in streaming with its Prime Video platform, along with releasing original films. Like Netflix Inc., Amazon is eager to shore up its burgeoning position in Hollywood as new and old players scrap for content deals. Buying a theater chain would guarantee another outlet for its movies.
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