AMC sweetens deal for Carmike Cinemas, calls it the ‘best and final offer’

Movie-theater operator AMC Entertainment Holdings, pursuing a finalized purchase of Carmike Cinemas for more than four months, sweetened the deal Monday for shareholders of the Columbus-based company.

The two motion-picture exhibitors said they have entered an “amended and restated merger agreement” with Leawood, Kan.-based AMC agreeing to buy all outstanding shares of Carmike stock for $33.06 apiece in cash or issuance of AMC common stock shares. That’s a cash increase from AMC’s previous offer of $30 per share.

AMC called this its last offer for Carmike, presumably drawing a line in the financial sand for sharehholders of Carmike who have opposed the acquisition because they did not feel enough money was being offered for the theater chain.

“We continue to believe that the proposed merger between AMC and Carmike is a compelling opportunity that offers significant value to both companies’ shareholders,” AMC President and Chief Executive Officer Aron Adam said in a statement. “For absolute clarity, let there be zero room for doubt or miscalculation. This latest agreement between AMC and Carmike is our best and final offer for Carmike.”

The bottom line for Carmike shareholders, who must approve the acquisition, is that AMC is offering them the choice of $33.06 in cash or 1.0819 shares of AMC common stock. Carmike said that price is a 32 percent increase over its share price as of March 3, the date the original agreement between the two parties was announced.

The previous deal was valued at $30 per share for Carmike shareholders, with the overall acquisition valued at $1.1 billion. The increase unveiled on Monday puts the total value of the proposed purchase of Carmike by AMC at $1.2 billion. That includes about $585 million in cash and $250 million in AMC stock, with AMC also assuming Carmike’s debt.

The most vocal opponent of the acquisition price has been Carmike shareholder Mittleman Brothers, a New York-based investment firm that owns 2.3 million shares of the theater company’s stock, or about 10 percent. The firm declined comment Monday, referring instead to a previous statement from it concerning “rumors” of an increase by AMC to about $33 per share.

“It would be a cynical lure to quick-buck artists, but otherwise a non-starter that any sentient shareholder should reject emphatically,” said Mittleman, which has said the minimum stock purchase price should be about $40.

A special meeting of shareholders that had been rescheduled for Monday in Atlanta was called off by Carmike, with the company saying it will release another proxy statement and acquisition prospectus at some point to let stock owners know when the new date for voting on the deal is to occur.

Carmike said its board of directors approved the revised purchase agreement unanimously and urges shareholders to give it the OK as well when the new vote is held.

“We are pleased to have reached this amended merger agreement with AMC, which follows extensive negotiations with AMC,” Carmike President and Chief Executive Officer David Passman said in a statement. “The revised merger agreement provides significant additional value to Carmike stockholders and enables our stockholders to now participate in the potential upside of a combined AMC-Carmike while continuing to receive significant, premium value for their investment in Carmike. Our board unanimously believes that this transaction is compelling and in the best interest of all Carmike stockholders.”

AMC said financing is in place for the latest offer, with the completion of the acquisition expected by the end of this year, subject to approval by regulators and shareholders.

AMC Entertainment Holdings is a majority-owned subsidiary of China-based conglomerate Dalian Wanda Group, which also operates cinemas in China and is considered that nation’s largest private property developer. It recently announced a $1.2 billion purchase of Odeon & UCI Cinemas Group in Europe, which would make AMC the largest movie-theater company in the world.

Odeon & UCI Cinemas Group operates 242 theaters and 2,236 screens in Europe, while Carmike has 276 theaters and 2,954 screens in 41 states. AMC Theatres has 385 locations and 5,380 screens, mostly in the United States.

This story was originally published July 25, 2016 at 10:33 AM with the headline "AMC sweetens deal for Carmike Cinemas, calls it the ‘best and final offer’."