AMC Entertainment has negotiated an agreement to buy Carmike Cinemas for a whopping $1.1 billion. The unprecedented acquisition will make AMC the largest movie chain in the world.
In a related Inquisitr report, the largest hotel chain in the world was created when Marriot purchased Starwood for $12.2 billion in November.
Per the details of the deal announced late Thursday, AMC will buy Carmike for $30 per share and take on Carmike’s debt. Both AMC and Carmike’s share prices surged after the news.
According to a Los Angeles Times report, AMC is one of the largest movie chains in the U.S., second only to Regal Entertainment Group. Once the Carmike purchase is complete, AMC will add 274 theaters to its portfolio, beating Regal’s total of 572. In the U.S., AMC will now have cinemas in 45 states and Washington, D.C.
AMC’s top executive, CEO Adam Aron, says the deal will bring together two strong companies, each with the ability to provide significant value to moviegoers and shareholders.
“Wherever you go, this deal is complementary. We’re strong in large cities, they’re strong in smaller cities. We’re strong in the Northeast, and they’re strong in the Southeast. The addition of Carmike increases our scale and our scope and allows us to take the successes we’ve had and extend them to these additional theaters.”
AMC theaters are mostly found in urban areas, especially in cities like Los Angeles. Meanwhile, Carmike has a major presence in more rural or small town communities.
Aron, who just took the chief leadership position in January, says AMC plans to make substantial upgrades and enhancements to the newly-acquired Carmike theaters. Over the past several years, the company has spent heavily to remodel many of their cinemas and have added better food offerings and reclining seats, as well as premium sound and digital equipment.
In addition to the high-quality upgrades, Aron plans to enhance AMC’s already successful customer loyalty program. The AMC executive believes the company’s larger size will increase the program’s ability to offer more and better benefits for customers.
“There are a host of things we can do,” he said. “As we represent a larger national footprint, there are more exciting things we can offer. We may get slots to movie premiere or special programming.”
The purchase deal is expected to be completed by the end of 2016, and Aron will remain at AMC’s helm along with current CFO Craig Ramsey. AMC intends to keep most of Carmike’s employees.
AMC buying Carmike is just another acquisition in an industry already undergoing a consolidation makeover.
While based in Leawood, Kansas, AMC is owned by Chinese real estate and media company Dalian Wanda Group. AMC was acquired by the real estate conglomerate in 2012 for $2.6 billion.
Wanda, which also owns the largest movie chain in China, has been on the move to increase its position in the global entertainment business. In a recent deal, the company purchased Legendary Entertainment in Burbank, California, and is considering a bid for Paramount Pictures.
Columbus, Georgia-based Carmike just finished a $36 million deal to acquire Robert Redford’s Sundance Cinemas. Included in the purchase were several theaters in California, Texas, and Washington. They also purchased a small theater chain named Digiplex in 2014.
Nearly three years ago, Regal added 43 theaters when it bought Hollywood Theaters in a deal worth more than $135 million.
“Fragmented industries have been consolidating for 100 years, and the movie theater business is a fragmented industry,” Aron noted.
Earlier this week, AMC reported a 40 percent increase in profit for the fourth quarter, mostly due to the Disney-Lucasfilm release of Star Wars: The Force Awakens. Additionally, revenue surged 10 percent to $783.9 million.
In after-hours trading Thursday, Carmike shares increased 15.5 percent, while AMC’s rose 7.4 percent.
Despite stiff competition from streaming services and video games, it has never been a more opportune time for AMC to buy Carmike. Last year, box office revenue hit $11 billion in the United States and Canada, so being the largest movie chain in the world is probably a good thing.
[Photo by Mario Tama/Getty Images]