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AMC Entertainment Surges as Amazon Considers Acquisition, According to Report

Amazon is reportedly considering acquiring AMC Entertainment, the struggling movie theater chain that has experienced a volatile period in recent years. The news caused AMC's shares to soar by as much as 21% on Tuesday.

According to a report from The Intersect, Amazon's founder and chairman, Jeff Bezos, has ordered his investment advisors to "explore acquisition plans" for AMC and its 600 movie theater locations. The report cited multiple senior sources familiar with the discussions.

Picture: Kumaon Jagran

If the acquisition were to happen, Amazon could use AMC's movie theaters as "marketing weigh stations" to promote its slate of Amazon Prime movies, cross-sell other Amazon services such as grocery delivery, as well as serve as a local distribution hub for Amazon products. Amazon used a similar strategy when it acquired Whole Foods in 2017.

AMC has experienced a rollercoaster ride over the past two years as it became the target of meme-stock investors on Reddit and other forums. Shares of AMC surged to a record high of nearly $73 in June 2021, but have since dropped more than 90% to $5.29. The potential acquisition by Amazon could help AMC service its multi-billion dollar debt pile, which is key given that the movie theater chain is not profitable as the movie box office has yet to reach its 2018 peak of nearly $12 billion. In 2022, the total box US office haul was just under $7.4 billion.

Despite the rumors and speculation, AMC CEO Adam Aron responded to The Intersect in a text message late Monday evening with "we do not reply to rumors and speculation."

The potential acquisition by Amazon could have far-reaching implications for the movie theater industry, which has struggled with declining attendance in recent years due to the rise of streaming services. It remains to be seen whether Amazon will ultimately move forward with an acquisition of AMC, but the news has certainly generated buzz and excitement among investors.

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