AMC Entertainment, the second-largest U.S. theater chain, said June 21 that it will buy Loews Cineplex Entertainment in a deal that will see AMC's president/CEO Peter Brown run the combined entity. Th


(The Hollywood Reporter) -- AMC Entertainment, the second-largest U.S. theater chain, said June 21 that it will buy Loews Cineplex Entertainment in a deal that will see AMC's president/CEO Peter Brown run the combined entity. The new theater chain, called AMC Entertainment and headquartered in Kansas City, Mo., will own 450 theaters with 5,900 screens in 30 states and 13 countries.

It will remain the No. 2 player behind Philip Anschutz's Regal Entertainment Group.

The deal follows an extended period of consolidation in the exhibition industry with both AMC and Loews gobbling up smaller players. In fact, this is the second time AMC and Loews have tried to merge.

Talks between the two companies began in late 2003 but fell apart in early January 2004. After that round of discussions, private equity investors JPMorgan Partners and Apollo Management bought AMC for $1.7 billion in July 2004 and removed the company from the public market. At that same time, Bain Capital, the Carlyle Group and Spectrum Equity Investors purchased Loews from Onex Corp. for $1.5 billion.

Terms of the June 21 deal were not disclosed. AMC's shareholders, under the holding company Marquee Holdings, will control 60% of the combined entity and maintain five seats on the board, including Brown's position as chairman. Loews' shareholders, under the name LCE Holdings, will occupy four seats on the board as part of its 40% equity stake in the new company. The deal is subject to regulatory approval and is expected to close in six to nine months.

An integration committee will be formed with Loews president/CEO Travis Reid and Brown serving as co-chairs. While Reid is expected to stay on through completion of the integration, the seasoned executive will not remain with AMC for the long term.

It is unclear what will happen to the company's onscreen advertising business and its movie-ticketing operations. Recently, AMC merged its advertising operation with Regal to create the largest digital cinema-advertising group in the United States, and Loews just signed a long-term deal with Screenvision to outfit its theaters with a digital advertising network.

Regarding movie ticketing, AMC created Movietickets.com as its subsidiary, while Loews is one of the founding partners of Fandango.com. Blase said all these issues will be resolved by the integration committee.

Thus far, industry reaction to the deal has been positive.

Upon close of the deal, the companies plan to refinance their senior credit facilities. Analysts are not expecting much change to the industry, based on the merger of the No. 2 and No. 3 players.