Struggling movie theater chain AMC Theaters may have found a savior of sorts that will extricate the company out of a financial quicksand: e-commerce giant Amazon.com is said to be pulling AMC up, and keeping it from sinking deeper with a possible buyout.
Shares of AMC Entertainment Holdings soared on heavy trading late Monday, following a media report that the movie theater group had held acquisition talks with Amazon, as AMC's stock value has plunged since the pandemic led to cinema shutdowns around the globe.
AMC's volume rose 30.0 percent to $5.32, the highest closing since March 4. Compared to the full-day average of around 9.1 million shares, trading volume climbed to 105.2 million shares. Amazon's shares were up 1.3 percent.
Amazon has not yet tried its hands on the movie business, while AMC is dealing with the financial shocks of moviehouse shutdowns linked to the coronavirus crisis. It is claimed that the world's largest theater operator is on the brink of bankruptcy, making it an attractive target for a buyout.
AMC shares have almost fallen by half, giving the theater operator a market cap of $427 million. The stock was up in early morning sessions as much as 11 percent to $4.56.
AMC Entertainment has been hounded by mounting debt, which makes the group susceptible in such a major business downturn and has sparked rumors about a looming financial collapse. Majority owner Wanda, the Chinese property giant, has denied the speculation.
AMC has secured $500 million in fresh funding in a debt sale last month to keep operating and has applied for government stimulus but the status of that is unclear.
For Amazon, which has had some success in releasing original flicks like "Manchester by the Sea" and "The Big Sick," acquiring AMC would give the retail giant a showcase for its major releases.
In 2019, Amazon started shifting from a traditional movie release strategy of screening films exclusively for 90 days before releasing them on its streaming platform, Amazon Prime.
Analyst Eric Wold said that acquiring AMC would have a major benefit for Amazon, but also expressed doubt that a deal would be signed, noting that the company's stock has been battered by the ongoing crisis.
Amazon has been courting AMC for a potential buyout agreement, a report from British newspaper The Daily Mail disclosed. These initial phase talks may or may not set the stage for a signed contract, the Mail's unidentified sources said, and it is not clear whether they are currently in the works. In short, AMC may be left without an Amazon deal in the end.
