There was a joke on an old episode of The Simpsons where Bart urged his parents to complete their transaction with a phone company before it changed names -- just as that very company switched its sign in the background.

That same joke could be made when it comes to the movie theater industry. Theater operators have been consolidating left and right in recent years, and that trend continued with the latest announcement that AMC Entertainment (NYSE:AMC) will acquire Carmike Cinemas (NASDAQ:CKEC) in a deal worth $1.1 billion. Motley Fool analysts Sean O'Reilly and Vincent Shen break the deal down in this clip from Industry Focus: Consumer Goods.

A transcript follows the video.

This podcast was recorded on March 8, 2016. 

Sean O'Reilly: AMC is buying a theater chain that I had not heard of, and I'm really sorry. Carmike? How big are they?

Vincent Shen: I'm surprised! They're the No. 4 operator, actually.

O'Reilly: They are, is it a West Coast thing?

Shen: I think it's moreso South-Southeast region, which actually, as we'll get to, pairs really well with AMC.

O'Reilly: Cool. Well let's dive in, what are the details?

Shen: Sure, last Thursday, AMC Entertainment Holdings, they're the No. 2 theater chain, by screen count at least. They announced they would be acquiring Carmike Cinemas, No. 4 chain. They're going to join up to beat out No. 1, who's currently Regal ...

O'Reilly: See, I'm a Regal man.

Shen: ... to create the largest theater chain worldwide. Just so our listeners know, the No. 3 player is actually Cinemark. The CEO of AMC is pretty new. He took the reins in January. His name is Adam Aron. He came from Starwood Hotels & Resorts, and he's already making his mark. He took over, like I said, just two months ago, a little over, and apparently there were two previous attempts for AMC and Carmike to do a deal, I think it was over the past four years, but they always fell through. But he made it happen.

O'Reilly: In your research, was it a price question? Why did it fall through a couple times?

Shen: I'm not sure. I think there's some concerns that we'll get to, around the deal. I think it's really driven by the new CEO and also the owners of AMC, which we'll get to. The purchase price was $30 per share, about a 20% premium to where Carmike stock closed before the announcement. Including debt assumption, the deal value comes out to about $1.1 billion. AMC, I thought this was an interesting metric, is paying about $376,000 per screen.

O'Reilly: Does that sound right?

Shen: On that note, AMC currently operates about 5,400 screens, so adding the approximately 3,000 Carmike has, will give it a base of over 8,000 screens in over 600 theaters in 45 states. So, huge countrywide operation.

In terms of the deal's effect on the two companies, they expect it to be accretive to cash flow right off the bat. The combined company, they think will enjoy, about $35 million in annual costs synergies, and as you'd expect, really similar operations, they're seeing that in accounting, finance, technology. They're also seeing some benefits with their negotiations. They're now the largest theater chain. They get to push their negotiations a little harder in terms of the revenue sharing with a lot of the major studios.

Investors seem pretty happy with the deal. Obviously Carmike shares traded up closer to the offer price. AMC shares are up over 10% since announcing the deal.

O'Reilly: That's pretty rare, to see an acquirer rise.

Shen: I think a lot of people are very positive because of how complementary their networks are. You have AMC which is generally more focused in urban areas in the Northeast. And then you have Carmike, and maybe this is why you're not as familiar with it, is more focused on like rural small town, suburban areas, in the Southeast. So you put the ...

O'Reilly: I do not make it to small town Florida.

Shen: Well yeah, the first time I had ever seen a Carmike theater was when I was still at UVA in Charlottesville.

Like I said, AMC shares up over 10% since announcing the deal, so investors seem pretty bullish and happy.

Sean O'Reilly has no position in any stocks mentioned. Vincent Shen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.