National CineMedia announced today that it has entered into a definitive merger agreement with Screenvision, for $375 million of cash and stock on a debt free, cash free basis. We will have a more complete report with analysis in the coming days.
The company is the managing member and owner of 45.8 percent of National CineMedia, the operator of the largest in-theatre digital media network in North America. Following the merger, NCM, Inc. will evaluate whether to contribute the Screenvision assets to NCM. Although it is under no obligation to do so, NCM, expects that it will contribute the Screenvision assets and debt incurred to finance the acquisition to NCM in exchange for approximately 9.9 million NCM membership units and that the combined operation will result in an estimated $30 million of annual operating cost synergies. The merger will create a higher quality and more competitive video advertising network that will cover nearly all 210 Designated Market Areas across all 50 states and deliver to approximately 3,900 theatres with over 34,000 screens, reaching over 1.1 billion annual patrons.
Under the terms of the agreement, the company will pay Screenvision’s owners a total purchase price of $225 million in cash and $150 million of the company’s common stock (approximately 9.9 million shares, based upon a fixed price of $15.15 per share), subject to a net working capital purchase price adjustment.
National CineMedia’s chairman and CEO Kurt Hall said, “We are very excited about our merger agreement with Screenvision as it will position the combined new company to be much more competitive in the expanding video and overall advertising marketplace, including the new online and mobile advertising platforms. With the investments we will be making to create one more efficient national network, I am confident that we will bring more advertising revenue to our theatre circuit partners and a higher quality pre show to their patrons.”
Hall concluded, “As technology continues to empower consumers to watch programming how and when they want and view advertisements if they want, with our broader network reach and improvements we are making to our audience targeting capabilities I am confident that our theatre network will become the one place where brands are comfortable their ads are being seen.”
Screenvision’s CEO Travis Reid said, "I could not be more proud of the Screenvision team's accomplishments in helping to drive the cinema advertising industry to where it is today. The choices for advertisers continue to grow daily, and I am excited by the possibilities this business combination creates to enable advertisers to use this high-impact medium even more effectively to reach their business goals."
The acquisition has been unanimously approved by the boards of directors of the company and Screenvision, as well as Screenvison’s equity owners, and is expected to close after the receipt of regulatory approvals and the satisfaction of other customary closing conditions.
The company was advised in this transaction by J.P Morgan as financial advisor and Sherman & Howard and Dechert as legal counsel. Moorgate Partners and GreenbergTraurig advised the company’s independent directors. Barclays is acting as exclusive financial advisor to Screenvision and legal counsel to Screenvision is Latham & Watkins.