What: Shares of Carmike Cinemas (NASDAQ: CKEC) jumped on Friday following the announcement that AMC Entertainment Holdings (NYSE:AMC) was buying the theater chain in a deal valued at $1.1 billion. At noon Friday, Carmike stock was up about 16.5%, while AMC's had risen 3.25%.

Image source: Carmike Cinemas.

So what: AMC, which was purchased by China's Dalian Wanda Group in 2012 and taken public in late 2013, will become the largest movie theater operator in the world following the completion of the deal. AMC currently operates 5,426 screens in the United States, while the smaller Carmike operates 2,954 screens. Carmike investors will receive $30 per share, roughly a 20% premium to the stock's closing price on Thursday. The transaction is expected to close by the end of 2016.

AMC expects the combination to produce annual cost synergies of $35 million, with the transaction being accretive to free cash flow per share. AMC CEO Adam Aron pointed to the benefits of the acquisition by saying:

By broadening AMC's geographic and demographic base for delivering our groundbreaking guest experience innovations in comfort and convenience -- such as plush power-recliners, enhanced food and beverage, premium sight and sound, greater guest engagement and targeted programming -- AMC is poised to deliver the best possible movie experience to more movie-goers than ever before.

Now what: With AMC's screens mostly in urban locations, the acquisition of the suburban and rural-focused Carmike allows the company to geographically diversify its operations. Carmike CEO David Passman had this to say of the deal:

By joining with AMC, we are bringing together two highly complementary theatre footprints and a shared commitment to service and innovation, positioning the combined company to deliver an even more compelling movie-going experience in many more locations across the country.

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