March 13--Shares in Carmike Cinemas, the nation's fourth largest theater chain, surged 12% follow a report the company was looking for buyers.
In early afternoon trading, investors sent shares climbing as high as $34.90, a new 52-week high, after Reuters reported that Carmike hired JPMorgan Chase Co. to evaluate options including a possible sale, Reuters reported.
The Columbus, Ga.-based company, which operates 2,894 screens in 41 states, has a market value of about $838 million at current prices.
In a statement, Carmike declined to confirm the report, saying its "policy is not to comment on unusual market activity or rumors."
Carmike also said it had been contacted by the NASDAQ stock exchange because of the unusual market activity.
Chief Executive David Passman told investors this month that the company, which has acquired 750 screens over three years, was looking to expand through continued acquisitions.
"We have the seasoned personnel and available resources to manage a considerably larger circuit, along with the available capital and additional liquidity to pursue opportunistic and accretive acquisitions," Passman said.
Other big chains also have been testing the waters. Regal Entertainment Group, which operates the nation's largest theater chain, last year also hired JPMorgan to consider strategic options, including a sale. In January, however, the chain said it had withdrawn those plans.
Regal did not disclose the reasons for its decision, but the move comes at a challenging time for the U.S. theater business, which has struggled with long-term stagnation in attendance and growing competition from Netflix and other in-home entertainment options.
The last sale of a major theater company came in 2012 when China's Dalian Wanda Group bought AMC, the nation's second-largest chain, for $2.6 billion.
