Carmike Cinemas (CKEC) Reiterates Support for AMC Merger

Shares of Carmike Cinemas, Inc. (CKEC) were trading down -0.02 or -0.07 percent to $30.10 per share in Monday’s premarket after the company urged shareholders this morning to vote “FOR” the merger with AMC Entertainment Holdings (AMC) at their shareholders Special Meeting being held today. The company reiterated its support for the merger after two proxy advisory firms advised shareholders to reject the buyout offer from AMC.

 Carmike Cinemas Inc. stock closed at $30.12 per share, up +0.22 or +0.74 percent in Friday’s regular trading session.

Stock Analysis

Columbus, Georgia based Carmike Cinemas Inc. was started in 1982 after the Fuqua Industries sale of Martin Theatres to Carl L. Patrick Sr. The company has since become a domestic leader in digital and 3-D cinema and is one of the country’s largest motion picture exhibitors. The company operates 276 theatres with 2,954 screens in 41 United States. In addition, Carmike operates 55 premium large format venues which include 21 IMAX auditoriums, 32 “BigDs” and 2 MuvIXL screens. The company bills itself as “America’s Hometown Theatre Chain” due to its focus on medium sized communities. Carmike received an offer of $1.1 billion or $30 per share from AMC Entertainment Holdings on March 3rd, 2016.

On Friday, two proxy advisory firms, Glass Lewis & Co. and Institutional Shareholder Services Inc. advised Carmike shareholder to vote against the proposed $1.1 billion takeover by AMC Entertainment Holdings. In addition, Glass Lewis advised shareholders to vote against payouts to executives and to adjourn the Special Meeting to give more time to gather support for shareholders against the merger.

In Friday’s release, Glass Lewis noted that while acting appropriately to the AMC bid, Carmike’s board “accepted an offer that appears to undervalue the company and insufficiently compensates shareholders for both the past and reasonably-expected future financial performance”. Carmike’s largest shareholders, Driehaus Capital Management LLC and Mittleman Brothers LLC are both against the merger.

Carmike responded in a press release this morning, stating that, “The AMC agreement is the culmination of a nearly two-year strategic review process during which no other offers were made. The AMC agreement also resulted in the highest large-scale industry transaction multiple in the past 10 years, and provides value to our stockholders that is well above where Carmike’s stock has historically traded or where we expect Carmike’s stock to trade on a standalone basis within any time frame that would be acceptable to us, particularly in light of recent industry-wide downward trends.”

The statement concluded saying, “After considering these dynamics and the certain, compelling value of AMC's $30.00 per share all-cash offer, the Board unanimously determined that the AMC agreement is in the best interests of all Carmike stockholders and remains firmly committed to the transaction. We look forward to further discussions with our stockholders about why we disagree with the conclusions reached by ISS and Glass Lewis.”

Wang Jinalin, who owns controlling interest in the Chinese Dalian Wanda Group, bought AMC in 2012 and is determined to further consolidate the movie industry. An analyst on Friday noted that with the opposition of proxy advisors and the two largest shareholders against the merger, AMC could increase the bid for Carmike by as much as $3.50 per share. Carmike stock is down a fraction after this morning’s news, as is AMC stock. Apparently, the market is waiting for the results of the company’s Special Meeting being held today.

Other News About CKEC

Carmike Cinemas, Inc. :CKEC-US: Earnings Analysis: Q1, 2016 By the Numbers

Carmike reported better than expected first quarter earnings in early May.

The Law Office of Robbins Arroyo LLP Announces that It Has Filed a Class Action Lawsuit Against Carmike Cinemas, Inc.

The lawsuit alleges the company’s board filed a misleading Preliminary Proxy Statement with the SEC.

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Published on Jun 20, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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