European exhibition circuit Kinepolis announced its entry to the U.S. market through an agreement to acquire Michigan-based movie theater chain MJR Digital Cinemas.
The deal will bring MJR’s 10 locations and 164 screens into the Kinepolis global network of theaters, which currently includes 97 cinemas and 884 screens across Belgium, Canada, the Netherlands, France, Spain, Luxembourg, Switzerland, and Poland.
The acquisition is valued at $152.25 million, and includes a substantial corporation tax value of over $13 million. PJ SOLOMON is serving as financial advisor and Honigman LLP as legal counsel to MJR Digital Cinemas.
All MJR sites are located within the state of Michigan, featuring complexes ranging from 10 to 20 screens. According to Kinepolis, MJR drew 6.2 million visitors with a total revenue of $81.2 million in 2018. Seven of those locations locations are owned (114 screens), including three on a leasehold site, and a remaining three are rented complexes (50 screens).
MJR’s recent theater upgrades include a circuit-wide adoption of 5.1 digital surround sound, recliner seating, and two exhibitor-branded “EPIC experience” PLF auditoriums with 4K projection and Dolby Atmos.
Kinepolis first entered the North American market with its acquisition of Landmark Cinemas, Canada’s second-largest circuit, in 2017.
“I’m very proud we have the opportunity to expand our investment in Canada to the US. The successful acquisition of Landmark Cinemas Canada shows we can successfully implement our corporate strategy in another continent and another time zone,” said Kinepolis CEO Eddy Duquenne in a statement. “The acquisition of MJR fits perfectly into our expansion strategy: geographically, it adjoins Canada; the movie theaters are all multi- or megaplexes, and we also acquire an important real estate position. I’m particularly enthusiastic about the eagerness of the current MJR team to implement Kinepolis’ management vision and customer concepts at the MJR cinemas.”
MJR is expected to continue operating under its existing brand name and retain current management, which will be integrated into the circuit at large by the European Kinepolis team and the Canadian Landmark team.
“I was very fortunate to build MJR from the ground up into the tremendous theatre circuit it is today,” said Mike Mihalich, Founder and CEO of MJR Digital Cinemas, in a statement. “I am delighted my outstanding supporting cast will continue as part of the larger Kinepolis team to serve our customers with the same high standards my team established and maintained since MJR’s founding in 1999. I am comforted such a high quality operator with shared values will steward MJR into the future.”
The acquisition is subject to U.S. antitrust clearance, Kinepolis expects to close the transaction in October 2019. Kinepolis states that MJR’s annualized and adjusted EBITDA stands at approximately $18 million; annualized and adjusted EBITDA contribution per visitor stands at $2.9 per visitor. Revenue from 2018 amounted to $81.2 million with 59.1% from box office sales, 37.6% from in-theater sales, and 3% from cinema advertising.
Kinepolis has grown into an influential multi-national circuit since being formed in 1997, as a result of the merger of two family-run cinema groups. The Belgium-based company was listed on the stock exchange in 1998 and is also active in film distribution, event organization, cinema advertising, and property management across select markets.