Sundance Cinemas — part of Robert Redford’s Sundance Group — hired investment bank Salem Partners in June to find a buyer. And today it has one: Carmike agreed to pay $36 million for Sundance’s 37 screens at five theaters in West Hollywood, San Francisco, Houston, Seattle and Madison, WI.
When the deal closes, Carmike will have 274 theaters with 2,909 screens — closing in on its goal of 300 and 3,000.
Carmike says the deal will add $24 million to its annual revenues. Sundance generated $2.58 million in net income in the 12 months that ended in June.
Sundance “has been enormously successful in creating a compelling consumer experience and shares our mission and vision of offering a world-class moviegoing experience, including an impressive premium dining offering,” Carmike CEO David Passman says.
He likes the “limited geographic overlap with our existing circuit.” The small theater group also will enable Carmike to “capture proportionally higher attendance rates for non-blockbuster titles and provide additional luxury expansion opportunities and meaningful cost synergies as we increase scale to optimize film exhibition and other support costs.”
Sundance Cinemas CEO Paul Richardson says the companies have “a common culture of innovation and customer focus.”
Carmike can continue to operate the theaters using the Sundance brand but can’t use it elsewhere.
Passman told analysts in July that he sees several opportunities to grow. The four biggest exhibition chains have about half of all U.S. screens while “the next 50 exhibitors own between 8,000 and 9,000 screens. We’re looking to acquire about 500. We really don’t believe that that’s an overly aggressive goal to shoot for in the foreseeable future.”
Carmike shares have lost about 27.8% of their value during the past 12 months.