AMC, Carmike merge to create top cinema chain
NEW YORK/LOS ANGELES: AMC Entertainment Holdings Inc, controlled by China’s richest man, agreed to buy Carmike Cinemas Inc in a $1.1 billion all-cash deal that would create the world’s largest cinema chain.
AMC, majority owned by billionaire Wang Jianlin’s Dalian Wanda Group Co, will pay $30 a share for Carmike, a 19% premium over its closing stock price on Thursday, according to a statement from the companies.
The agreement combines the secondand fourth-biggest US cinema chains and vaults the resulting entity past Regal Entertainment Group.
“I called the CEO of Carmike on my first week of the job,” Adam Aron, AMC’s chief executive officer, who took over in January, said in an interview. “We had dinner on the third week. There was no reason to go slow. There is an old adage, ‘Time is the enemy of all deals’.’’
Wanda wasn’t directly involved in talks, he added.
AMC’s offer is low on a per-screen basis and Carmike could attract a counterbidder like Regal Entertainment, according to Eric Wold, a B. Riley & Co analyst.
Together, AMC and Carmike would have well over 600 locations in 45 states across the United States, including the District of Columbia, according to the companies’ joint statement.
“The deal may require some divestitures,’’ Carmike’s chief executive officer David Passman said in an interview, adding that the talks had been going on for a few weeks.
“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 statement.
“While some cinema sales may be necessary,’’ he said “the two circuits are quite complementary, with AMC in urban markets and Carmike having a larger presence in smaller cities.’’
The combined company will be run by Aron, who was appointed on Jan 4, and will keep its headquarters in Leawood, Kansas, according to the statement.
The transaction was approved by both boards and is expected to close by year end.
The deal helps Wang achieve his goal of controlling 20% of the global film market by 2020. AMC operates 5,426 screens, according to its latest earnings release, while Carmike had 2,954. Regal closed out 2015 with 7,361 screens.
Wang’s Dalian Wanda Group, a real estate-to-entertainment conglomerate, acquired AMC Entertainment in 2012 for $2.6 billion including debt.
Wang is the second-richest person in Asia behind Hong Kong billionaire Li Kashing, according to the Bloomberg Billionaires Index.
It’s already been a busy year for Wanda. The company agreed in January to buy Legendary Entertainment, the independent film and TV producer that made Godzilla, for $3.5 billion.
Wanda also announced a retail-and-leisure development outside of Paris, a $2.3 billion investment in three hospitals, the formation of a financial group and the signing a $10 billion development deal in India.
The company has also said it’s planning five major acquisitions in 2016 — three of them overseas.
Wang’s film, tourism and sports operations all fall under its fast-growing Cultural Industry Group, which saw revenue climb 46% last year and is forecast to climb 30% in 2016.
By comparison, Wanda Group estimates overall sales rose 19% in 2015 and will probably decline 12% this year because of the slump in its property business.