In his first public comments since letting the world know that the movie-theater company he has led since 2009 is being sold in a $1.1 billion deal, Carmike Cinemas President and Chief Executive Officer David Passman said Tuesday he isn’t relieved or euphoric or doesn’t even see it as a mission accomplished.
“It’s actually melancholy,” he said. “A lot of what we — not just me — but what we have done at the company I have real mixed emotions about. Somebody else is now going to be responsible for doing that. I kind of liked being responsible for it.”
Passman’s thoughts came after completing an hour-long presentation to Columbus State University students at the Center for Commerce and Technology on the school’s main campus. His appearance is part of the Turner College of Business Executive Speaker Series.
The Carmike executive dished out to students a detailed lesson on the movie-theater industry, of which his Columbus-based company is the fourth-largest player. The second-largest, Leawood, Kan.-based AMC Entertainment Holdings, which operates AMC Theatres, is purchasing the locally headquartered firm, a deal expected to close before the end of this year. Leawood is a suburb of Kansas City, Mo.
With a change in corporate headquarters, there will be some change that will be very, very painful for some of our people, some of our very dedicated, successful, long-term people who for whatever reason don’t see Kansas City as a potential home.
Carmike Cinemas President and CEO David Passman on the future elimination of the headquarters operation in Columbus
AMC President and CEO Adam Aron has said his company plans to keep the Carmike Cinemas brand and low-cost operating model for now. But he didn’t mince words in a conference call last Friday that cost efficiency cuts will be major part of the transition process, including the elimination of the Carmike headquarters in Columbus.
Passman said Tuesday there are about 150 people employed in his company’s corporate office at 1301 First Ave. in downtown Columbus and accompanying shops that handle things such as theater seats and draperies. He expects that within 18 to 24 months, the sleek headquarters complex and its operations will be a “mere remnant” of what it is today.
“They’ll probably sell the building at some point,” he said of AMC. “But it’s got a year between now and when we expect the (deal) to close and people to start interviewing or making decisions on moving.”
In fact, it is the people part of the deal over which the Columbus CEO said he has “real mixed emotions.” AMC said it will eliminate any duplicate operations when it shifts Carmike’s corporate functions to Kansas, particularly back-office expenses in areas such as information technology, accounting, legal and human resources.
“With a change in corporate headquarters, there will be some change that will be very, very painful for some of our people, some of our very dedicated, successful, long-term people who for whatever reason don’t see Kansas City as a potential home,” Passman said.
The executive, who took charge of Carmike in June 2009, when its revenues and stock were floundering, also acknowledged the uneasiness that comes with a community losing a corporate headquarters. He called Columbus the epitome of hometown America, which is part of the company’s mission statement and slogan.
“It’s a big enough city that we have the arts, but it’s a small enough city where everybody knows everybody, and to lose a corporate headquarters is a major blow,” he said. “But I think that our people will end up fine. Those who choose to move will end up fine. Those who choose to stay here are the best this community has to offer. So they’re professional people and they’ll be a part of somebody else’s company.”
AMC said it will eliminate any duplicate operations when it shift’s Carmike’s corporate functions to Kansas, particularly back-office expenses in areas such as information technology, accounting, legal and human resources.
As for his plans, Passman, who turns 64 in June, joked with the students Tuesday that he will be entering the unemployment line following the completion of AMC’s buyout of his company. He said it’s “way too early to predict” if he will make Columbus a permanent home, although he and his wife, Brigitte, are rebuilding a house in Green Island Hills.
“It won’t be ready until this summer,” he said. “So we plan on spending some time there. Once the transaction actually closes … we’ll start taking a look at whether we can travel from here or that kind of thing. We definitely want to do some travel.”
Touching on the timing of Carmike’s acquisition by AMC, Passman said he wanted to set the record straight. The Columbus firm has had a number of discussions over the last several years with other companies interested in it. A Reuters article a year ago reported that his firm had hired JPMorgan to put Carmike up for sale, which he said was “absolutely false.” JPMorgan, he said, was used to help the theater chain field any offers that came up.
The bottom line, the CEO said, is that when a potential suitor such as AMC calls, which Aron did after taking the CEO position at AMC in December, he’s obligated to listen to what they have to say in the best interests of his own shareholders.
“At the end of the day, when my phone rings I have to answer it, and this was a call from the new AMC CEO, who is very different from the most recent CEO,” Passman said. “He was interested in doing something that would be good for his shareholders and fair to my shareholders, and that’s exactly what we did after a two-month period.”
The agreement between AMC and Carmike calls for the Kansas firm to pay $30 in cash for every share of stock held by the Columbus company’s shareholders, which was nearly 20 percent above the March 3 closing price of $25.11. AMC also will assume debt held by Carmike. Aside from U.S. Department of Justice regulators, Carmike shareholders must approve the purchase.
Carmike Cinemas currently operates 276 theaters (2,954 screens) in 41 states. It has roughly 8,000 employees, all but the corporate staff working inside its movie complexes scattered across the country.
The pending deal, upon approval, will make AMC Theatres the largest movie-theater chain in the world, the companies said, with AMC ultimately operating more than 600 movie theaters and more than 8,000 screens in 45 states and Washington, D.C. The No. 1 motion-picture exhibitor now is Knoxville, Tenn.-based Regal Cinemas, with nearly 600 theaters and roughly 7,300 screens.
AMC Entertainment Holdings is majority-owned by China-based corporate conglomerate Dalian Wanda Group, which also operates cinemas in China and is considered that nation’s largest private property developer.