Marcus Theatres Crosses 1,000 Screens with Acquisition of Movie Tavern

Acquisition of Dine-In Cinema Circuit Boosts Marcus Screen Count by 23%

Marcus Theatres will become the fourth active U.S. exhibitor  to surpass the thousand-screen benchmark with the acquisition of Movie Tavern from Southern Theatres.

The deal adds Movie Tavern’s 22 locations and 208 screens in 9 states to the Marcus circuit, expanding the Marcus presence to new U.S. markets and boosting its total screen count by 23 percent. With the acquisition, Marcus Theatres, the country’s fourth largest exhibitor and fifth largest in the U.S./Canada North American market, will count with 1,098 screens across 90 locations in 17 states.

“The acquisition of Movie Tavern is another significant milestone in the growth trajectory of Marcus Theatres,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation, in a press release. “Selective, disciplined acquisitions such as this create a compelling opportunity to expand into new growth markets and leverage our proven success. We anticipate this acquisition will be accretive to earnings, earnings per share and cash flow in the first twelve months following the closing of the transaction, and expect a smooth integration of Movie Tavern into our circuit. In addition, by using common stock as a component of the consideration, we will continue to maintain an extremely strong balance sheet and be in a position to consider additional growth opportunities in the future.”

The deal is currently valued at approximately $126 million, comprised of $30 million in cash and 2,450,000 shares of The Marcus Corporation common stock, based on the company’s most recent closing share price and subject to certain lock-up restrictions.

“The foundation of our growth and success is our guest service expertise and the strength of our food and beverage offerings, which includes multiple lobby and in-theatre dining options that have revolutionized the moviegoing experience,” states Rolando B. Rodriguez, chairman, president and chief executive officer of Marcus Theatres, in the same press release. “Building upon this successful platform, we look forward to collaborating with our new colleagues to further enhance the Movie Tavern experience. This includes leveraging our ‘to the seat’ delivery of food and beverages, as well as the introduction of new amenities to select locations, such as premium large format screens and DreamLoungerSM recliner seating; signature programming, such as $5 movies on Tuesdays with free popcorn for loyalty members; and proven marketing, loyalty and pricing programs that will benefit Movie Tavern guests.”

Movie Tavern opened its first location, in Fort Worth, Texas, in 2001. It played an important part in the expansion of the dine-in cinema concept, leading to its acquisition by Southern Theatres in 2013. The dine-in cinema chain has a presence in Arkansas, Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas, and Virginia. Marcus Theatres, which is primarily concentrated in Midwestern states, plans to retain the Movie Tavern branding at existing locations.

“Now is an exciting time for our Movie Tavern colleagues and guests as they become part of the Marcus Theatres family,” said John P. Caparella, chief executive officer of Southern Theatres. “As we have demonstrated over the years, there is a tremendous appetite for well-executed in-theatre dining. By being part of the Marcus Theatres team, Movie Tavern will be even better positioned to enhance the guest experience.”

The transaction is expected to be completed early in the first quarter of 2019, subject to Hart-Scott-Rodino Act clearance and other customary closing conditions, consents and approvals.

“Marcus Theatres has set a high bar for exceptional theatre ownership and management and possess the capital and expertise to elevate the Movie Tavern concept to even higher levels,” said Trent Hickman, managing director of VSS, the private equity fund which counts with Southern Theatres as part of its portfolio. “We have enjoyed partnering with the Movie Tavern team, and remain invested in their success.”

J.P. Morgan is serving as financial advisor and Foley & Lardner LLP is serving as legal counsel to The Marcus Corporation. PJ SOLOMON is serving as financial advisor and Ropes & Gray LLP is serving as legal counsel to Southern Theatres.

Daniel Loria

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