News & Our Thinking

(St. Louis Business Journal) 

“This is everything we’ve been waiting for Marcus to do,” Eddie Vigil, Argent Capital Management portfolio manager, said. Argent bought stock in the theater chain’s parent company, Marcus Corp. (NYSE: MCS), in September 2014 and has seen an 80 percent return, Vigil said. The acquisition could add about $80 million in revenue for Marcus, he projected. Marcus Theatres is the fifth-largest movie chain in the country.

December 28, 2016 (Steph Kukuljan)

Marcus Theatres’ acquisition of Wehrenberg Theatres likely will be a blockbuster for investors and moviegoers given the Milwaukee-based company’s history of solid investment and consumer upgrades and high return on assets.

“This is everything we’ve been waiting for Marcus to do,” Eddie Vigil, Argent Capital Management portfolio manager, said. Argent bought stock in the theater chain’s parent company, Marcus Corp. (NYSE: MCS), in September 2014 and has seen an 80 percent return, Vigil said. The acquisition could add about $80 million in revenue for Marcus, he projected. Marcus Theatres is the fifth-largest movie chain in the country.

“Marcus is a very good steward of capital and a very good steward of brand,” he said.

Marcus Corp. owns 686 movie theaters and eight hotels and operates 11 hotels and resorts across the country, with its theaters found around much of the Midwest. Marcus saw its total revenue rise 8 percent to $144.7 million, from $133.9 million, in the third quarter of fiscal 2016. Its theater division reported a 19 percent spike in revenue and a 47 percent increase in operating income.

Wehrenberg has 14 locations in Missouri, Illinois, Iowa and Minnesota and was family-owned before longtime president and CEO Ronald Krueger died in 2015. In the takeover deal, Marcus will acquire six of the theater locations’ real estate and Ronnie’s Plaza, the 84,000-square-foot retail center, at 5320 S. Lindbergh Blvd., in south St. Louis County. The retail center has an appraised value of $10.9 million.

Marcus Corp. President and CEO Rolando Rodriguez has said that the Wehrenberg name would stay. It was uncertain whether the 31 employees at Wehrenberg’s headquarters in Des Peres would stay on, though the chain’s other 967 employees are expected to stay on, Argent’s Vigil said.

Marcus has invested over $115 million in its theaters since 2013, expanding its signature drink and dining concepts that include full-service dining, updating its screen and sound options, and installing more DreamLounger recliners that the company says has “significantly increased attendance … (and has outperformed) nearby competitive theatres,” according to Marcus Corp.’s 2015 annual report. Rodriguez, in a statement announcing the acquisition, said the company planned to upgrade features and amenities at some of the Wehrenberg theaters.

“It’s good from a St. Louis perspective to get that kind of investment. They’re not coming in and milking the theaters for all they can,” Vigil said. “They see it as a way to jump into the market.”