National CineMedia Inc. (NCMI), the largest supplier of commercials in movie theaters, agreed to buy its closest competitor for $375 million in cash and stock.
National CineMedia, based in Centennial, Colorado, will pay $225 million in cash and $150 million in stock for New York-based Screenvision, according to a statement yesterday.
The merger will create a company with a presence in 210 markets and more than 3,900 theaters, according to National CineMedia. The company delivers advertising to theaters run by AMC Entertainment Inc., Cinemark Holdings Inc., Regal Entertainment Group and others. The three chains are also majority owners of the advertising network.
National CineMedia fell 2.9 percent to $14.85 at 10:20 a.m. in New York. But news of the deal drove Carmike Cinemas Inc. (CKEC) to its biggest gain in more than two years. Shares of Carmike -- which owns 253 theatres in 37 states -- jumped 12 percent to $33.47, after earlier rising 16 percent.
The Screenvision deal should generate $30 million of cost savings in personnel and other overhead, National CineMedia Chairman and Chief Executive Officer Kurt Hall said in an interview. In addition, the combined companies will be able to offer more options for advertisers including ads displayed onscreen, in the lobby and on mobile devices.
“We’re selling it all as a package,” he said.
Separately, National CineMedia said its loss widened to $3.1 million in the first quarter. For the second quarter, the company expects sales to decline as much as 21 percent, a reflection of weaker ad spending before purchases for the next TV season begin next week, Hall said.
To contact the editors responsible for this story: Anthony Palazzo at email@example.com Rob Golum, James Callan