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AMC and Carmike Cinemas to Merge

AMC announced this week its plans to buy fellow movie theater Carmike Cinemas1.  The $1.1 billion deal will create the largest movie theater in the United States2.  The deal, according to Wang Jianlin, AMC’s controlling shareholder, essentially boils down to a $30 per share cash offer, which represents a 19% premium over Carmike’s market price prior to the announcement3.

The deal is expected to create significant synergies for both companies.  AMC, currently the number two movie theater by size in the United States, will easily surpass its big brother Regal with the purchase of No. 4 Carmike4.  AMC currently operates 5,000 screens, and the addition of Carmike will put that number over 8,000, with 600 theaters in forty-five states5.  Management for both companies expect roughly $35 million in annual cost synergies due to the companies’ substantial similarities.  These would come not only from accounting, finance, and technology, but increased negotiation power due to the resulting company’s larger size6.

The merger also makes sense for the two companies geographically.  AMC primarily has theaters in the northeast and other large urban areas, while Carmike is based more in the Southeast in small to mid-size non-urban areas7.  Thus, the two theaters will not only complement each other well, but shareholders will not have to worry about much overlap8.  AMC plans to use some of the cost savings to improve its customer experience; CEO and president Adam Aron stated that “By broadening AMC’s geographic and demographic base for delivering our groundbreaking guest experience innovations in comfort and convenience — such as plush power-recliners, enhanced food and beverage, premium sight and sound, greater guest engagement and targeted programming — AMC is poised to deliver the best possible movie experience to more movie-goers than ever before,”9.  The transaction is expected to close sometime in 2016, subject to regulatory approval10.


  1. Sei Chong, Morning Agenda: AMC to Buy Carmike Cinemas in $1.1 Billion Deal, The New York Times (Mar 4, 2016), http://news.blogs.nytimes.com/2016/03/04/morning-agenda-amc-to-buy-carmike-cinemas-in-1-1-billion-deal/?ref=topics 

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  4. A New Box Office Leader is Born with AMC Entertainment and Carmike Cinemas Merger, The Motley Fool (Mar 8, 2016), http://www.fool.com/investing/general/2016/03/11/a-new-box-office-leader-is-born-with-amc-entertain.aspx 

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  7. AMC Theaters to Acquire Carmike Cinemas, Creating Largest Chain of Movie Theaters in the U.S. and the World, Business Wire (Mar 3, 2016), http://www.businesswire.com/news/home/20160303006740/en/AMC-Theatres-Acquire-Carmike-Cinemas-Creating-Largest 

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Andrew Smith

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