The CEO of AMC Theaters warned that the planned merger with Carmike Cinemas is “at considerable risk” after a vote on the deal was delayed Thursday.
“AMC Entertainment remains committed to our proposed transaction to acquire Carmike Cinemas,” Adam Aron said in a statement. “The rationale to acquire Carmike continues to be valid, namely to create a larger system of theaters nationwide … Even so, this transaction is now at considerable risk.”
“We note that the financial metrics surrounding the Carmike acquisition get marginal very quickly above the $30.00 deal price. Accordingly, we are fully prepared to see the Carmike transaction pass by the wayside,” he continued. “These views in mind, AMC has requested that the Carmike shareholder vote be adjourned from June 30 to July 15, 2016 giving time for all concerned to determine if this transaction will be preserved or instead abandoned.”
AMC Theaters is owned by the AMC Entertainment Group, a majority owned subsidiary of China’s Dalian Wanda Group. If successful, the deal would give Wanda, which already runs China’s largest exhibitor, control of the top theater chains in the world’s No. 1 and No. 2 box office markets.
Citi is serving as exclusive financial advisor to AMC and Husch Blackwell is serving as AMC’s lead legal advisor. J.P. Morgan Securities is serving as exclusive financial advisor and provided a fairness opinion to Carmike. King & Spalding is acting as legal counsel to Carmike.