Federal judge denies Carmike shareholders’ attempt to halt sale to AMC

A federal judge on Tuesday denied an attempt by some Carmike Cinemas shareholders to halt a June 30 vote on the Columbus-based theater chain’s pending sale to AMC Entertainment Holdings Inc.

U.S. District Court Judge Clay Land rejected a request for a temporary restraining order by plaintiffs in multiple cases that were consolidated in an order by Land the day before.

“Because Plaintiffs have not demonstrated how they will be irreparably harmed if the June 30 shareholder vote is allowed to proceed, their motion for the extraordinary remedy of a temporary restraining order is denied,” Land wrote. “The Court finds that no discovery will alter this conclusion.”

The shareholders contended that the proposed $30 per share sale price was not adequate. The shareholders claimed the negotiated acquisition of Carmike was “at an unfair price through an unfair process that was tilted in favor of AMC” to the detriment of Carmike shareholders.

On March 3 it was announced Carmike and Leawood, Kan.-based AMC had signed an agreement in which AMC will acquire the smaller theater chain in a deal valued at $1.1 billion.

It took less than two months for some shareholders to attempt to stop the transaction.

The San Diego-based law firm Robbins Arroyo LLP filed the class-action lawsuit on April 25 on behalf of John Solak and “all others similarly situated” in the Columbus division of U.S. District Court of the Middle District of Georgia.

In his ruling, Land alluded to the plaintiffs’ claims that they would be irreparably harmed if the sale was finalized.

“The Plaintiffs make the colorful argument that once the shareholder vote occurs, ‘the eggs cannot be unscrambled,’” Land wrote. “But the Court does not understand why the ‘scrambling’ prevents Plaintiffs from ever obtaining the full value of their ‘eggs.’ If the stock is worth more than $30 per share and Defendants’ conduct caused it to be improperly undervalued due to a breach of fiduciary duty or violation of the securities laws, then Plaintiffs should be able to unscramble them to the extent that they will eventually be paid for the full value of their ‘eggs.’”

No closing date for the transaction has been set. A Carmike spokesman could not be reached for comment.

This story was originally published June 14, 2016 at 2:41 PM with the headline "Federal judge denies Carmike shareholders’ attempt to halt sale to AMC."