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AMC Acquires Carmike Cinemas for $1.1 Billion, Making It World’s Largest Theater Chain

UPDATED: AMC Entertainment has agreed to acquire Carmike Cinemas in a $1.1 billion deal that will make the exhibitor the largest theater chain in the United States and in the world.

Headquartered in Columbus, Ga., and known as “America’s hometown theatre circuit,” Carmike is the fourth-largest exhibitor in the country, with 2,954 screens to AMC’s 5,426 screens. Together AMC and Carmike would have well over 600 theater locations in 45 states across the country, including the District of Columbia.

Regal Entertainment, with 7,361 screens, was previously the largest domestic exhibitor. AMC was itself acquired in 2012 by China’s Dalian Wanda Group for $2.6 billion.

“In one fell swoop this allows AMC to grow by a significant margin,” AMC president and CEO Adam Aron said in an interview with Variety. “Our assets are highly complementary and do not overlap much with Carmike right now.”

He noted that AMC theaters tend to be more clustered in urban areas, whereas Carmike locations are more rural.  The company estimates that the merger will produce $35 million in cost synergies.

The combined company will be headquartered in Kansas City, Mo. where AMC has been based for more than nine decades. The AMC management team will oversee the company, but Aron predicted that the number of layoffs would be minimal.

“The vast majority of Carmike employees will join the AMC family,” said Aron.

The move comes following a record year for ticket sales, with the domestic market surpassing $11 billion in revenue for the first time in history. Industry-wide, however, attendance remains relatively flat, and the theater business faces challenges from the growing popularity of streaming services and video games, as well as a rise in quality television programming. AMC has moved aggressively to counter those challenges by installing recliners, expanding its menu options, and offering alcohol service at certain locations. Aron has said that improving AMC’s loyalty program is a priority and the company plans to redesign and relaunch it in the second half of this year. The AMC chief predicted that the enhanced size of the company would allow it to offer more benefits to its 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.”

Analysts have been predicting that improved box office and an increased emphasis by the entertainment industry on foreign investment would inspire consolidation on the domestic front. Carmike itself has helped in that effort by snapping up smaller chains, such as Digiplex, which it acquired in 2014.

AMC underwent a management shift in recent months. In December AMC tapped Aron, former CEO of Starwood Hotels & Resorts, to take over from Gerry Lopez, who left AMC last summer to run hotel chain Extended Stay America.

Carmike’s purchase price per screen is approximately $376,000, and represents an approximate 19.47% premium on the company’s March 3, 2016, closing stock price.

Shares of AMC were up 7.2% to $27.55, while shares of Carmike climbed 5.9% to $26.60 in after-hours trading.

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