AMC Entertainment Holdings on Tuesday won U.S. antitrust approval with conditions to buy smaller competitor Carmike Cinemas Inc in a $1.2 billion deal that would create the biggest U.S. movie theater chain.
The Justice Department said it approved the deal on condition that AMC and Carmike divest theaters in 15 markets and take steps to ensure that National Cinemedia and Screenvision, the two companies that make and sell pre-show advertising entertainment, remain viable.
Kansas-based AMC, which is majority-owned by Chinese billionaire Wang Jianlin’s Dalian Wanda Group, has about 380 theaters, while Georgia-based Carmike has 276 theaters, according to their websites.
Competitor Regal Majestic has theaters in some 549 locations, according to company data.
The Justice Department expressed two concerns over the merger. The first had to do with loss of competition between movie theaters in 15 markets in nine states: Alabama, Florida, Georgia, Illinois, Minnesota, New Jersey, Oklahoma, Pennsylvania and Wisconsin. One condition for the acquisition was that AMC or Carmike be required to sell a theater in each of those markets.
The Justice Department also said it was concerned about the loss of competition between National Cinemedia and Screenvision, which make the advertising programming that theaters run before movie previews.
AMC owns a big chunk of National Cinemedia while Carmike is a major customer of Screenvision. National Cinemedia and Screenvision abandoned a planned merger last year after the Justice Department in 2014 sued to block it.
The Justice Department required AMC to get rid of most of its ownership interest in National Cinemedia holdings, retaining just 4.99 percent. It also required that 24 theaters with 384 screens be transferred to the Screenvision network to ensure both remain viable.
AMC did not immediately respond to a request for comment.