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AMC Theatres Hikes Carmike Bid to $1.2 Billion

New offer is 10 percent higher than previous one

| July 25, 2016 @ 7:19 AM
amc theaters carmike

AMC Theatres has upped its offer for competitor Carmike.

Carmike shareholders now have the option to receive either $33.06 in cash — a 32 percent premium over the company’s March 3 close price — or 1.0819 shares of AMC’s Class A common stock. Based on AMC’s New York Stock Exchange close price Friday, the transaction is now valued at approximately $1.2 billion. Previously, it was $1.1 billion.

That prior offer came in at $30 per share — this one is 10.2 percent higher. It’s also AMC’s “best and final” one, company president and CEO Adam Aron said on Monday.

Also Read: AMC Theaters CEO Warns Carmike Merger Is 'At Considerable Risk'

The $1.2 billion breaks down to $585 million paid in cash and $250 million in AMC’s Class A common stock to be paid to Carmike stockholders, plus AMC’s assumption of Carmike’s net debt.

“Some Carmike stockholders may still oppose this transaction because of published analysis that we believe is materially flawed,” Aron admitted in a media release. “For example, movie theatre transactions in Europe and Asia/Pacific are erroneously cited as comparables for the Carmike purchase, even though the major U.S.-based theatre operators trade every day on U.S. exchanges at considerably lower multiples.”

“As another example, some take AMC’s tax [net operating loss] and apply them to the Carmike transaction, even though we have alternate uses for these credits,” he continued. “As such, they understate the incremental cash tax cost to AMC.”

Also Read: Redbox Parent to Be Bought by Private Equity Firm in $1.6 Billion Deal

“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,” Aron concluded. “While we would like this transaction to go forward, we are fully prepared to focus instead only on the improving fortunes of AMC and on our Odeon & UCI acquisition in Europe if a majority of Carmike shareholders do not find this revised offer attractive.”

“We are pleased to have reached this amended merger agreement with AMC, which follows extensive negotiations with AMC,” David Passman, Carmike president and chief executive officer, said. “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.”

The Carmike board of directors unanimously recommends the amended terms.

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