Carmike Cinemas Inc. shareholders on Tuesday approved a merger with AMC Entertainment Holdings Inc., creating the world's largest movie-theater chain.
More than 86% of votes cast by Carmike shareholders approved the $1.2 billion deal, which initially faced shareholder resistance when it was announced in March. AMC, which is majority-owned by China's Dalian Wanda Group Co., offered $33.06 a share and some AMC stock in the deal.
AMC had been the nation's second-largest theaterchain with about 388 locations; Carmike was No. 4 with 273. The previous No. 1 exhibitor, Regal Entertainment Group, has 565 theaters.
Their tie-up means that Regal Entertainment Group would be bumped from first place in domestic theater rankings. The deal still needs to be approved by the Justice Department and is expected to be completed by the end of this year or early 2017.
AMC is completing a second deal worth $650 million to acquire Europe's Odeon & UCI Cinemas Group. The Odeon and Carmike deals will increase AMC's footprint to about 900 theaters.
Wanda bought AMC in 2012 for $2.6 billion. Since then, the exhibitor has spent hundreds of millions of dollars renovating its theaters with wide recliners and full-service kitchens. The concept was initially met with skepticism in the industry but has since taken off and has been replicated by competitors. AMC executives said they plan to bring the features to Carmike locations.
Carmike has been a takeover target for years. It operates in more rural locations than AMC, which should help the deal clear antitrust scrutiny, though some divestitures are expected. Following the deal, some Carmike locations will take the AMC brand, while others will either retain the Carmike brand or adopt another name entirely.
AMC initially offered $30 a share, or $1.1 billion, for Carmike. Major shareholders pushed back, saying the terms undervalued the company. AMC's sweetened offer?and the arrival of arbitrage firms who bought AMC stock hoping for a quick bump in price?helped get the votes the company needed on Tuesday.
In the four years since its AMC purchase, Wanda has expanded its Hollywood footprint with acquisitions that include the $3.5 billion purchase of Legendary Entertainment and $1 billion deal to acquire Dick Clark Productions.
Wanda's new position as the No. 1 exhibitor in North America comes as the exhibition industry'sdynamics are shifting around the world and the company stakes out territory in the two most important markets.
The Beijing-based real-estate conglomerate also controls thousands of screens in China. Analysts this month said China would have more screens than any other market starting some time this week. IHS Markit researchers expect the theater count in China to pass the U.S. on Nov. 16, according to a report released last week, marking the first time the U.S. isn't the world's largest cinema market. The value of the Chinese box office remains second to the U.S., and is expected to remain there until 2019.
China had 39,194 screens at the end of September, while the U.S. had 40,475. China is building screens at a rate of 27 a day, the analysts said.
Chinese box-office grosses were once expected to surpass the U.S. sometime next year, but a recent slowdown has pushed that projection back to 2019, according to IHS.
Write to Erich Schwartzel at email@example.com
(END) Dow Jones Newswires
November 15, 2016 20:35 ET (01:35 GMT)
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