Case Study

Starplex

Case Study: Starplex Cinemas $172 Million Sale to AMC Theatres

Situation Overview
  • Trinity Hunt, a Dallas-based private equity firm, looking to exit their investment after acquiring Showplex Cinemas in May 2010 and subsequent combination with Starplex in December 2012
  • PJ SOLOMON was selected as financial advisor based on recent experience advising on the sale of Movie Tavern to Southern Theatres and the sale of Kerasotes Theatres to AMC
  • PJ SOLOMON reached out to senior decision makers at eight strategic buyers in a tailored process in July 2014
  •  Initial bids came in lower than client expectations due to lack of buyer conviction for pro forma adjustments (run rate for refurbishments, a new location, etc.)
  • Starplex decided to suspend the process and revisit in 2015 after the pro forma adjustments materialized
Process and Results
  • Starplex and PJ SOLOMON met with select group of strategic buyers at CinemaCon in April 2015
  • Provided parties update on financial performance and realization of prior pro forma adjustments
  • PJ SOLOMON organized management presentations and provided access to detailed due diligence for the interested parties
  • AMC put forth a compelling bid which led Starplex to enter into 3 week exclusivity period
  • Starplexand AMC announced acquisition on July 14, 2015
    • Premium valuation achieved for seller
    • 100% exit and liquidity for private equity owner, Trinity Hunt
    • Captured share of AMC value for synergies and NCM Common Unit Adjustment
  • PJ SOLOMON capitalized on the competitive theatre marketplace to capture significant value and contractual protections
Strategic Rationale
  • Expansion of AMC’s proven and successful guest experience strategies into additional Starplex markets – “We will add 90 recliner re-seated screens to our portfolio and plan to add recliners to an additional 80 screens over the next five years, further transforming the movie-going experience for millions of guests.”
  • Complementary theatre locations with limited geographic overlap
  • “Our large market theatre portfolio will be complemented by new small and mid-size market theatres, which gives AMC broader movie genre appeal across a wider spectrum of guests.”
  • Attractive synergies available by combining back-of-the-house functions such as human resources, accounting, finance and technology

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