Carmike Agrees To Buy Digiplex In An All-Stock Deal

Carmike Cinemas logoThis is the latest installment in the exhibition consolidation saga — and a logical one in light of Carmike‘s stated goal to build itself to 3,000 screens from about 2,660 in time for the onslaught of potential blockbuster sequels Hollywood plans to release in 2015. Westfield, NJ-based Digiplex has 206 screens in 21 locations and agreements to pick up five theaters with 53 screens, and introduces Carmike to four states: Arizona, Connecticut, Maryland and New Hampshire. Carmike can flex its financial muscle: It owns about 19% of cinema ad sales company Screenvision, which National CineMedia recently agreed to buy for $375M.

DigiplexDigiplex — the short name for Digital Cinema Destinations Corp — is an interesting target. CEO Bud Mayo, who controls 39.5% of the voting shares, is well known in the industry. He co-founded Clearview Cinema, sold to Cablevision in 1998, and then co-founded Cinedigm, which he ran until 2010 when he founded Digiplex. Over that period he became a vocal supporter of digital projection and alternative content. He urged his colleagues, at the recent CinemaCon industry convention, to step up their efforts to find concerts and sports events to show on typically slow weeknights.

But small theater chains have struggled: Digiplex shares lost more than 23% of their value since the company went public in 2012. They’re up 8.3% in after-market trading today, following the announcement of the deal with Carmike. It has agreed to exchange 0.1775 of its shares for each of Digiplex’s 7.93M shares. That implies a $45.3M value for Digiplex — a 15.4% premium based on its market value today, based on Carmike’s closing price of $32.19 a share.

Here’s the companies’ release: (more…)

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