The Market Believes The AMC Theaters-Carmike Merger Will Go Through

The market believes that the merger deal between AMC Entertainment Holdings Inc

and Carmike Cinemas, Inc.

will go through, as the Carmike shares are trading below the $30 takeout price, indicating that the market assigns a high probability on the success of the deal. Shares of CKEC closed Thursday's regular trading session at $25.11. On Friday, the shares were up as much as 16 percent at $29.08. AMC agreed to buy Carmike Cinemas for $30.00 a share in cash. The transaction is valued at about $1.1 billion, including Carmike's debt. The purchase price per screen is about $376,000, and the per share purchase price represents a premium of 19.47 percent to Carmike's March 3, 2016 closing price. AMC has 5,426 screens, while Carmike has 2,954 screens, primarily located in mid-size, non-urban communities. Together AMC and Carmike would have well over 600 theatre locations in 45 states across the country. The transaction is expected to result in free cash flow per share accretion, excluding one-time charges, in 2017 and beyond, and is expected to produce annual cost savings of about $35 million. The deal is expected to be completed by the end of 2016, subject to customary closing conditions, including regulatory approval and approval by Carmike's shareholders. Shares of AMC were down 19 cents at $25.51. They have gained 8 percent this year.