Is Regal Entertainment The Most Likely Buyer For AMC's Divestitures?

Loop Capital’s David Miller said he would not be surprised to see if Regal Entertainment Group RGC bulk buys theaters that AMC Entertainment Holdings Inc AMC is seeking to divest to gain Department of Justice approval for its acquisition of Carmike Cinemas, Inc. CKEC.

Rumors Of Retail Sales/Buys

The DoJ seeks AMC to sell between 15–20 theaters in select areas in the South, including in Texas, and parts of the New Jersey/Philadelphia for the Carmike deal approval. AMC has also targeted a 60-day window for selling those assets, which was set on December 20.

“Assuming we are correct and RGC takes a hard look, RGC has somewhat of an advantage here in that AMC would be looking to unload these assets as quickly as possible without any rub with the DOJ, or negative press,” Miller wrote in a note.

Analyst Commentary

The analyst estimates Regal offering $50.0 million–$60 million, or roughly $375,000 per screen, firmly in the middle of industry averages. Also, Miller predicts Regal to pay the entire amount in cash, given $186.9 million on the balance sheet.

Meanwhile, Regal will be reporting its quarterly results on February 9 and Miller expects $820.5 million in revenues and $0.30/share in core, non-GAAP EPS versus consensus of $804.8 million/$0.26.

Miller has a Hold rating and $22 price target on Regal shares, which, at last check, were little changed at $22.45.