AMC Entertainment Holdings said on Tuesday it would buy London-based Odeon & UCI Cinemas Group to create the world’s largest movie theater operator, marking the first big deal by a U.S. company to buy a British firm since the Brexit vote.
AMC, the No.2 movie theater chain in North America, will buy Odeon from Guy Hands’ private equity firm Terra Firma in a deal valued at about 921 million pounds ($1.21 billion).
The deal would have cost AMC about $160 million more before Britons voted on June 23 to leave the European Union, sending the pound crashing to a 31-year low.
It is also a vote of confidence by AMC in the UK economy, whose outlook has dimmed since the referendum.
“While we acknowledge that there are some uncertainties related to Brexit, we are encouraged that current currency rates are highly favorable to AMC with the pound falling to a three-decade low versus the dollar,” AMC Chief Executive Adam Aron said.
AMC, majority-owned by Chinese billionaire Wang Jianlin’s Dalian Wanda Group, would have 627 theaters and more than 7,600 screens in eight countries after the purchase of the biggest theater operator in Europe.
Odeon and UCI, which has 242 theaters and 2,236 screens, will continue to be based in London.
Stifel, Nicolaus & Co analyst Benjamin Mogil said in a note the deal was more about expanding AMC’s recliner model, enhanced food offerings and technology.
AMC has refitted some of its theaters with recliners instead of standard seating and said that attendance has gone up by 75 percent at these locations.
AMC said it expects the introduction of the features to increase attendance and revenue at Odeon & UCI theaters.
AMC said it would assume 407 million pounds of net debt as part of the deal, which is expected to close by Dec. 31.
The U.S. company also said it was committed to closing its $1.1 billion acquisition of Carmike Cinemas, which was thrown into doubt after the smaller chain adjourned a shareholder vote on the deal last month.
AMC said it would continue to work with Carmike this week to see if the deal could be saved, while acknowledging that it was at “considerable risk”.
AMC’s shares were up 4 percent at $28.94, while Carmike shares were slightly down.
Citi advised AMC in the Odeon & UCI deal, while Goldman Sachs International advised Terra Firma.