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Movie Tavern chain acquired for $126 million

🕐 3 min read

Movie Tavern, which has several locations in North Texas, is being acquired by Marcus Theatres, a division of The Marcus Corp. (NYSE: MCS),from VSS-Southern Theatres LLC, a portfolio company of private equity firm Veronis Suhler Stevenson. Based upon the Nov. 1 closing share price of The Marcus Corp.’s common stock, the purchase price is currently valued at approximately $126 million, comprised of $30 million in cash and 2,450,000 shares of The Marcus Corporation common stock, subject to certain lock-up restrictions.

With 22 locations and 208 screens in nine states, New Orleans-based Movie Tavern is an industry leader known for its in-theatre dining concept featuring chef-driven menus, premium quality food and drink and luxury seating. Upon completion of the transaction, Marcus Theatres will own or operate a total of 1,098 screens at 90 locations in 17 states, representing a 23 percent increase in Marcus Theatres’ total screen count.

“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 Corp. “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 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.

“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,” said Rolando B. Rodriguez, chairman, president and chief executive officer of Marcus Theatres. “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 DreamLounger 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.”

The first Movie Tavern location opened in 2001 in Fort Worth, and Movie Tavern has become one of the largest and fastest growing in-theatre dining concepts in the United States. Owned by Southern Theatres since 2013, Movie Tavern has expanded to nine states – Arkansas, Colorado, Georgia, Kentucky, Louisiana, New York, Pennsylvania, Texas and Virginia. Marcus Theatres will retain the Movie Tavern brand name given its strength and appeal.

According to a Marcus Corp. presentation to investors, Movie Tavern expects to report annualized 2018 revenues around $145-150 million, including annualizing two new locations opened in 2018.

“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.”

“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. “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.

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