AMC must sell off theaters to complete $1.2 billion buyout of Carmike

The Justice Department has laid out requirements that AMC Entertainment Holdings Inc. must satisfy for its Anti-Trust Division to sign off on AMC’s $1.2 billion buyout of Carmike Cinemas.

The deal will make AMC the biggest U.S. movie theater operator.

The DOJ is requiring AMC to sell off 15 theaters in nine states where it competes with Carmike. It would also require AMC to divest itself of most of its holdings and governance in National Cinemedia and transfer 24 theaters with a total of 384 screens to Screenvision LLC, a theater advertising company and principal rival of National Cinemedia.

“By requiring AMC to reduce its equity stake in NCM, terminate its participation in NCM’s business, and transfer screens to Screenvision, the settlement will promote continued vigorous competition between the two leading cinema advertising networks,” said Renata Hesse, acting assistant attorney general in the DOJ’s Antitrust Division.

The DOJ’s Antitrust Division filed a civil antitrust lawsuit Tuesday in the U.S. District Court for the District of Columbia to block the proposed acquisition. But at the same time, the department filed its proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit.

The department said that without the required divestitures and other relief, the merger would result in higher prices and lower quality theater amenities for moviegoers and weakened competition in the markets.

AMC is a Delaware corporation with its headquarters in Leawood, Kan. It operates about 388 theatres with 5,295 screens in 33 states and the District of Columbia. Its U.S. box office revenues were about $1.9 billion in 2015.

Carmike, headquartered in downtown Columbus, operates 271 movie theaters with 2,917 screens in 41 states. Its U.S. box office revenues were about $490 million in 2015.

If approved, the buyout would include $585 million in cash and $250 million in AMC’s Class A common stock and AMC would assume $367 million in debt.

AMC shares rose 25 cents to $33.45 on Tuesday, while Carmike shares closed up 15 cents at $33.40.

This story was originally published December 21, 2016 at 3:11 PM with the headline "AMC must sell off theaters to complete $1.2 billion buyout of Carmike."