Coverage: AMC Theatres to buy Carmike Cinemas for $1.1 billion

AMC Entertainment Holdings agreed to buy Carmike Cinemas for $1.1 billion that will make the Chinese-owned company the largest movie-theater operator in the U.S.

Combined the companies will own more than 600 theaters and operate 8,380 screens.

Erich Schwartzel of The Wall Street Journal had the day’s news:

AMC Entertainment Holdings Inc. agreed to buy Carmike Cinemas Inc. in a cash deal that would make a Chinese-owned company the largest movie-theater operator in the U.S.

AMC will pay $30 a share for Carmike for a total payout of $1.1 billion, including the assumption of some Carmike debt, the companies said Thursday. The price is a nearly 20% premium to Carmike’s closing share price of $25.11 on Nasdaq.

The deal also makes AMC the world’s largest movie-theater operator. Currently Regal Entertainment Group is the largest theater company in the U.S. AMC is the second-biggest in the nation and Carmike is No. 4. The deal is subject to antitrust review by the Justice Department.

AMC was purchased in 2012 by China’s Dalian Wanda Group Co. for $2.6 billion. Wanda has made significant inroads in Hollywood since then, most recently purchasing “Jurassic World” financier Legendary Entertainment for $3.5 billion in January.

Chinese companies have been on a global shopping spree in recent months, helping the Chinese government with its agenda to enter the global market and build the Chinese brand overseas.

Michael J. de la Merced and Michael Cieply of The New York Times explained just how large the new theater chain will be:

AMC, based in Leawood, Kan., is the country’s second-biggest movie theater chain with 5,426 screens, behind the Regal Entertainment Group. It is particularly strong in large markets, including New York, Los Angeles and Chicago.

Carmike, based in Columbus, Ga., has most of its 2,954 screens in midsize cities. The combined companies will be based in Leawood, they said.

By comparison, Regal operated 7,361 screens and 572 theaters as of year end.

AMC said the deal would increase the geographic spread of its theaters, while allowing it to trim expenses by consolidating administrative operations for the two companies. The company estimated the merger would yield about $35 million in annual cost savings.

The deal is expected to close by the end of the year, pending approval from regulators and by Carmike shareholders.

“This is a compelling transaction that brings together two great companies with complementary strengths to create substantial value for our guests and shareholders,” Adam Aron, AMC’s chief executive, said in a statement.

Together with Regal, AMC owns Open Road Films, a movie distributor whose “Spotlight” was named best picture at the Academy Awards on Sunday.

Debt financing for the deal will be provided by Citigroup, which also provided financial advice to AMC, while the law firm Husch Blackwell provided legal counsel. JPMorgan Chase and the law firm King & Spalding advised Carmike.

Charles Clover of The Financial Times focused on Dalian Wanda’s CEO Wang Jianlin:

Wang Jianlin, China’s richest man, has extended his foreign acquisition spree in the entertainment industry after his US theatre group AMC bought Carmike for $1.1bn, in a deal that will create the largest US cinema chain.

The buyout adds to the list of US film industry assets already part or fully-owned by Mr Wang’s conglomerate Dalian Wanda, including film studio Legendary Entertainment, which Wanda bought in January for $3.5bn.

Mr Wang, who served in the People’s Liberation Army for 17 years before founding Dalian Wanda in 1989, has a fortune estimated at $28.7bn by Forbes, placing him among the world’s top 20 richest people.

His expanding foreign holdings include property, sports and entertainment. Last month Dalian Wanda said it would help develop a €3bn leisure project on the outskirts of Paris alongside France’s Immochan, while last year Dalian Wanda bought the Ironman Triathlon franchise for $650m.

Mr Wang launched his foray into the US entertainment sector in 2012 with the purchase of AMC in 2012 for $2.6bn. Later he was linked to talks with film studios such as DreamWorks and Lions Gate, until the January announcement that he would buy a controlling stake in Legendary, creator of the Batman Trilogy.