AMC Entertainment Holdings Inc. (NYSE: AMC) agreed to buy Carmike Cinemas Inc. (NASDAQ: CKEC) for $1.1 billion, saying that the deal will create the largest chain of movies theaters in the U.S.
The Chinese-own company agreed to pay $30 a share for Carmike, a nearly 20% premium over Carmike’s closing price of $25.11 on Thursday. AMC will pay Carmike in cash for about $1.1 billion.
The deal will create the world’s largest cinema chain. Before the deal, AMC is the second-biggest theater company in the U.S., operating about 5,426 screens, while Carmike is the fourth largest in the nation, operating about 2,954 screens. The combined company will replace Regal Entertainment Group as the biggest theater chain in U.S., having more than 600 theaters in 45 states and the District of Columbia.
Dalian Wanda Group, a real estate-to-entertainment conglomerate, acquired AMC Entertainment in 2012 for $2.6 billion including debt. Its CEO Wang is the second –richest person in Asia, according to the Bloomberg Billionaires Index. Dalian Wanda Group is trying to build its cinema empire in the world. The company just acquired Legendary Entertainment, the independent film and TV producer, for $3.5 billion in January. It acquired Australian cinema chain Hoyts Group last year.
AMC’s Chief Executive Officer Adam Aron, who just took over in January, said that Wanda wasn’t directly involved in talks. He also said that he called the CEO of Carmike on his first week of the job.
“This is a compelling transaction that brings together two great companies with complementary strengths to create substantial value for our guests and shareholders,” Aron says. “Through this transaction we expect to unlock synergies, sufficient we believe to make this transaction accretive in 2017.”
AMC shares rose 3.11 percent to $26.54 at 12:02 p.m. in New York, while Carmike shares rose 16.57 percent to $29.27.