Taylor Dyer
April 14, 2023
Amazon may be looking to buy AMC according to reports by several news outlets. Shares for AMC jumped more than 18% two weeks ago, following the speculation of possible interest. Shares of Amazon in comparison stayed relatively the same. The specific details of what an acquisition would look like have yet to be revealed.
Amazon CEO, Jeff Bezos supposedly has investment advisors and his top entertainment chiefs exploring acquisition plans for AMC. According to the Intersect, early descriptions about the deal state that Amazon would use the movie theater chain to “promote Amazon prime movies for rewards connection, cross-selling services such as grocery delivery, serving as local distribution hubs, and collecting data from AMC’s annual customers.”
Amazon is no stranger when it comes to investing in the entertainment industry. Purchasing IMDB in 1998, for $55 million, this was the company’s very first addition, and continues to be one of Amazon’s most popular subsidiaries. For those unfamiliar with IMDB, it stands for Internet Move Database, and people often use it to find information about movies, television programs, and video games.
Why the Deal May Be Unlikely
There is some speculation about whether the deal will happen, as there is no guarantee that the retail giant will even make an offer. Analysts covering both companies also believe this idea is far-fetched.
When an Amazon spokesperson was asked about the potential deal, they replied with the “company does not comment on rumors or speculation.” It is also known that AMC has a significant amount of debt, making an investment more costly for Amazon. Reports show the cinema chain has a $5 million debt load.
In addition to that, it may make more sense for Amazon to acquire a smaller company. This would be less of a hassle and would give Amazon more of a chance of success. For instance, Regal Cinemas may be a more reasonable option since its parent company, Cineworld filed for bankruptcy.
While there is a lot to be gained from Amazon inking a deal with AMC, it is not entirely clear whether the company is willing to take the risk and make an offer. While Amazon would potentially be acquiring a lot of debt from the deal, perhaps with their influence they can reinvent AMC to increase profits, after the company edged on bankruptcy three years ago. With the COVID pandemic calmed, this may be the right time for a deal to be made.
Edited By: Yasmin
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