posted 03-11-2004 08:51 AM                       

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Cinemark theaters to be sold for $1B
DALLAS (AP) -- A private investment firm is close to an agreement to buy Cinemark USA Inc., the nation's third-largest movie-theater chain, for about $1 billion, The Wall Street Journal reported Wednesday.
Madison Dearborn Partners LLC would also assume $560 million in Cinemark debt, the newspaper reported, citing people familiar with the situation.

Officials at Cinemark and Madison Dearborn did not immediately return calls for comment Wednesday.

Plano-based Cinemark has more than 3,000 screens, mostly in the United States and South America.

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Cinemark acquisition sparks AMC rumor

By JENNIFER MANN The Kansas City Star

AMC Entertainment competitor Cinemark USA Inc., in the latest sign of industry consolidation, reportedly is being acquired by a private investment firm in a deal valued at $1.56 billion.

Dallas-based Cinemark, the third-largest movie chain after Regal Cinemas and AMC, has movie complexes in Merriam and on the Country Club Plaza.

The Wall Street Journal reported Wednesday that Madison Dearborn Partners LLC was close to a deal with Cinemark. The story concluded with speculation that Kansas City-based AMC also “would be interested in a sale.”

AMC said that speculation was false.

“We've been identifying ourselves for a number of years as an acquirer, not a seller of theater assets,” said company spokesman Rick King. “We've completed acquisitions and continue to pursue acquisitions as part of our future plans.”

In the past two years, AMC bought General Cinema and Gulf States, which together added about 700 screens. AMC, which on Jan. 1 had 3,549 screens, recently broke off talks with Loews Cineplex Entertainment Corp. about a possible “business combination.”

Though neither AMC nor Loews' owner, investment firm Onex, commented on the talks, there had been speculation that Loews was looking for the same kind of multiples Cinemark seemed to be attracting.

Madison Dearborn is reported to be paying $1 billion in cash for Cinemark and assuming $560 million in debt, giving the deal a total value of $1.56 billion. Although Cinemark is privately owned, it has been reported that annually it has $200 million in EBITDA — earnings before interest, taxes, depreciation and amortization. Analysts generally view EBITDA as an important financial measure in certain industries, including movie exhibition.If those figures hold true, Madison Dearborn would be paying about 7.8 times Cinemark's EBITDA, which could define the current playing field for near-term acquisitions in the industry.

AMC has declined to comment on specifics of its talks with Loews. But AMC chairman Peter Brown has been adamant that AMC would not overpay.

Janco Partners analyst Matt Harrigan said that based on his latest research, AMC was trading for about six times its estimated adjusted EBITDA for the year ending in March 2005.

“Eighteen months ago you could pay five times EBITDA, but now the bigger guys want a multiple of seven, eight times,” Harrigan said, adding that he expected AMC to stay its course.

“I would certainly expect them to be a part of the consolidation process,” said Harrigan, “but as a consolidator, not a consolidatee.”

AMC shares closed Wednesday at $15.16, up 18 cents.

To reach Jennifer Mann, call

(816) 234-4453 or send e-mail to jmann@kcstar.com.

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Posted: Mon., Mar. 1, 2004, 4:40pm PT

Financial players eye Cinemark
Madison Dearborn bids $1.6 bil for chain

By CARL DIORIO
An auction for Cinemark appears to be heating up, but most of the interest for the Dallas-based movie circuit seems to involve financial investors rather than another of the nation's other big exhibs....

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