Amid fewer Hollywood blockbuster releases and the infinite buffet of streaming content, the movie theater business in general continues to face challenges.
Yet the recent decision by Troy-based Emagine Entertainment to sell itself to European theater operator Kinepolis Group was not one made under any financial distress, according to Paul Glantz, 68, Emagine’s co-founder, chairman and chief executive.
“You know, the best time to sell a business is when you don’t have to — and that’s precisely our circumstance,” Glantz said in a phone interview on Friday, Nov. 7.
Emagine isn’t highly leveraged with debt, Glantz said, and he said he personally is in good health.
“So there was no pressure to sell the company,” he said. “It was just the most rational decision that this makes the most sense to protect its valuation.”
All of the theaters will be keeping the Emagine brand name under the new Belgian-based owner. Emagine has a workforce of roughly 1,000, he said, with the majority of them young part-time workers. There are about 300 full-time employees.
The sale will involve at least 14 Emagine theaters in Michigan, Illinois, Indiana and Wisconsin. It is expected to close by year’s end, with the transfer of liquor licenses the main outstanding task that needs to happen.
The tentative sale price is $105 million, although it could go up as much as $15 million based on box office results through the rest of the year.
‘Not compelled to sell’
Glantz said he and his family are by far the largest owners of Emagine with 36% of the business. About 100 investors own the rest, he said, many of them part owners of individual theater buildings. The second-largest Emagine owner has about 5%, he said.
“There was sort of a consensus that the best time to sell is when you’re under no pressure to do so,” Glantz said. “Here’s why: because you have deal discipline, meaning you don’t get something jammed down your throat. You are in a good negotiating position, because you are not compelled to sell.”
He added, “If you were to talk to my counterpart Eddy — (Kinepolis CEO Eddy Duquenne) — he would say that it was a pretty challenging negotiation, because we simply didn’t have to agree to certain things or sub-optimize the valuation, because again, we’re cash-flowing, we’re paying dividends, we’re serving our guests.”
Well known by customers
Glantz is known well by Emagine customers, as he appears on screen before the start of every movie.
Glantz said he is planning to meet next week with Duquenne when the Kinepolis CEO visits Detroit and they could discuss the possibility of him staying on at Emagine in some kind of role.
“I’ve posed the question to Eddy, ‘Did he foresee a continuing role for me after the transaction?’ And he said, well, we’ll talk about that,” Glantz said.
“I would hope that I can continue at a minimum to be a brand ambassador for the business. It’s my legacy, and I want to see it continue to succeed.”
“Of course, I won’t be responsible for the operational performance,” he added. “But I certainly want our guests to know that we still care about them, and our teammates, too.”
Fate of Birmingham Emagines
Another likely discussion topic with the Kinepolis executive will be the status of the two Emagine theaters in Birmingham — Emagine Palladium and The Birmingham 8 Powered by Emagine — that aren’t on the list of 14 theaters in the sale.
Glantz said they also intend to sell those two theaters to Kinepolis. But there were complications involving the leases and real estate for the locations, he said, and that is why they weren’t included in the primary transaction.
Asked who approached who first about the $105 million deal, Glantz said that Emagine has “known” the Kinepolis Group since 2019, and last summer they “put together our numbers” and in January they reached the outline of an agreement.
A letter of intent was then signed in late June, he said. The sale was officially announced Nov. 4.
Glantz said there were other potential suitors for Emagine, but he probably shouldn’t identify them publicly. However, he did say that none of them were private equity companies.
“I think private equity is scared of our industry,” he said.
The Kinepolis Group previously acquired MJR Digital Cinemas in 2019 and has continued operating those 10 theaters under the MJR name.
Glantz said he has a positive assessment of Kinepolis’ ownership of those legacy MJR theaters. He pointed to capital investments in the MJR theaters, such as the new IMAX screen installed this year at the MJR Troy.
“The nice thing about these folks is they are not capital-constrained either,” Glantz said. “I think they know the importance of maintaining and protecting the value of their operating assets and that bodes well.”
“Emagine is going to be my legacy,” he added, “and my goal is for them to be very successful as new owners.”
Keeping the theaters up
Glantz agreed that the movie theater industry continues to face business challenges, and said there is a definite need for more film releases in theaters and a greater variety of films.
Nationwide, movie attendance is still down about 30% to 35% since the COVID-19 pandemic, he said. Glantz said there is a widening gulf between movie theaters whose owners are putting in the money for upgrades and refurbishments, and those whose owners are not.
Emagine has been making those necessary investments, he said, and attendance at its “legacy” theaters is comparable to what it was in 2019.
Emagine recently spent over $1 million refurbishing the chairs, armrests and cupholders at many of its theaters, he said.
“The point is we have the means to do that,” he said. “And when you have that means, you don’t need to sub-optimize in your transaction.”
Emagine has experienced a boost to its bottom line from its purchase of four theaters out of the 2020 bankruptcy of Grand Rapids-based Goodrich Quality Theaters. Those theaters were in good locations, but needed interior upgrades, he said.
“It’s turned out quite well, because those four theaters now contribute about one-third of our earnings,” he said.
Contact JC Reindl: 313-378-5460 or jcreindl@freepress.com. Follow him on X @jcreindl
This article originally appeared on Detroit Free Press: Paul Glantz says he faced ‘no pressure’ to sell off Emagine to Europeans
Reporting by JC Reindl, Detroit Free Press / Detroit Free Press
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