The stockmarket needs more unlikely deals like AMC's mining punt

AMC’s investment in a gold miner is hard to justify, but companies should be a bit bolder, says Matthew Lynn

Odeon cinema
If AMC strikes gold, it should subsidise the popcorn
(Image credit: © Getty Images)

It was a plot twist to rival any on its thousands of screens. The cinema chain AMC, which owns the Odeon brand in the UK, last week announced that it was spending $28m on a major stake in Hycroft Mining, a precious metals explorer that may be sitting on big potential reserves of gold and silver in Nevada. It was one of the oddest corporate acquisitions in many years, and to say the market didn’t exactly cheer the move would be an understatement. The deal is “embarrassingly stupid”, according to one analyst. “Taking valuable cash and investing it into a high-risk business outside of its core competency,” argued Eric Handler, media and entertainment analyst at MKM Partners. “I don’t get it.”

Adam Aron, AMC’s chief executive, justified it as “a bold diversification move”, which is putting it mildly. Whether Hycroft actually manages to find any gold under the ground remains to be seen, but heck, if it strikes a rich stream maybe AMC could even reduce the price of the popcorn at its cinemas – the only thing in the world that costs more per ounce.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.