AMC Entertainment Holdings Inc., based in Leawood but owned by a Chinese company, announced Thursday night that it has agreed to purchase Carmike Cinemas Inc. for $1.1 billion.
The deal would reportedly create the world’s largest movie chain.
AMC said it would pay $30 cash per share for all the outstanding shares of Carmike, a roughly 20 percent premium from Carmike’s closing stock price Thursday.
Carmike, based in Columbus, Ga., has 276 theaters with 2,954 screens in 41 states. Most of its theaters are in midsize communities in outstate areas.
AMC has 387 locations and 5,426 screens, mostly in urban areas in the United States. If the deal goes through, the combined chain will have 8,380 screens.
AMC is now the second largest movie theater chain in the country, while Carmike is the fourth largest. A merger would top the U.S. industry leader, Regal Entertainment Group, which has 7,361 screens.
In a press release announcing the deal, AMC and Carmike said the combined company would be headquartered in Leawood. The CEO of AMC, Adam Aron, would be CEO and president of the new company.
“This is a compelling transaction that brings together two great companies with complementary strengths to create substantial value for our guests and shareholders,” Aron said in the release. “We also look forward to welcoming so many talented Carmike employees to the AMC team.”
David Passman, Carmike’s president and CEO, called the combination “a transformative milestone for Carmike.” He added that the purchase price would provide “significant value to Carmike shareholders.”
He added: “By joining with AMC, we are bringing together two highly complementary theatre footprints and a shared commitment to service and innovation, positioning the combined company to deliver an even more compelling moviegoing experience in many more locations across the country.”
The companies’ announcement stressed that the deal would diversify AMC’s footprint “with complementary geographic and guest demographic profiles.” It would also reduce administrative expenses by combining back-office support functions.
It said the merger “is expected to produce annual cost synergies of approximately $35 million.”
The deal is expected to close by the end of the year, subject to regulatory approval and approval by Carmike’s shareholders.
AMC was founded in Kansas City in 1920 when brothers Edward, Maurice and Barney Dubinsky bought the Regent Theater, then located near 12th and Walnut streets. The three settled in Kansas City, changed their name to Durwood, and Edward’s son Stan went on to become the company’s longtime CEO as it grew into one of the largest theater chains in the country.
Stan Durwood created the multitheater concept in 1962, opening what is believed to be the first theater designed as a twin multiplex at the Ward Parkway Shopping Center on July 12, 1963.
AMC was bought in 2004 for about $1.7 billion by an investor group that included Apollo Investment Fund, J.P Morgan Partners, Bain Capital Investors, the Carlyle Group and Spectrum Equity Investors.
In 2012, AMC was purchased for $2.6 billion by Dalian Wanda Group Co., led by Wang Jianlin. According to data compiled by Bloomberg News, he is China’s richest man, with a net worth of $27.5 billion.
AMC will discuss the transaction in greater detail in a conference call and webcast Friday at 7:30 a.m. Central time. To listen to the conference call on the Internet, please visit the investor relations section of the AMC website at www.amctheatres.com for a link to the webcast. Investors and interested parties should go to the website at least 15 minutes prior to the call to register and/or download and install any necessary audio software. To access the call from the U.S., dial 855-327-6837. From international locations, the conference call can be accessed at 778-327-3988. An archive of the webcast will be available at www.investor.amctheatres.com for a limited time after the call.