Carmike Cinemas (CKEC) Enters Into Sweetened Deal With AMC

Shares of Carmike Cinemas, Inc. (CKEC) were trading up +0.37 or +1.19 percent to $31.50 per share in Monday’s premarket after news early this morning that the company had entered into an amended and restated merger agreement with AMC Entertainment Holdings Inc. (AMC) Carmike Cinemas stock closed at $31.13, unchanged from its previous day’s closing price 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 273 theatres with 2,938 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.

Leawood, Kansas based AMC Entertainment Holdings, Inc. was founded in 1920 by the Dubinsky brothers after the purchase of the Regent Theatre in downtown Kansas City, Missouri. The company is now a majority owned subsidiary of Chinese conglomerate Dalian Wanda Group. Before yesterday’s announcement, the company had the second largest share of the U.S. market after Regal Entertainment Group. AMC’s subsidiaries include AMC Loews, Loews Cineplex Entertainment and AMC Cinema Suites to name only a few. The company operates 387 locations with 5,426 screens mostly in the United States.

Early this morning, AMC Entertainment raised its previous offer of $1.1 billion or $30 per share made on March 3rd, to a final offer of $1.2 billion, a +10.2 percent increase over the original offer. The Carmike Board of Directors unanimously approved the deal, but has yet to decide whether a revised record date will be set for a reconvened Special Meeting of Stockholders. Nevertheless, Carmike’s board is likely to set a new record date in light of the amended offer.

Carmike President and Chief Executive Officer David Passman said in this morning’s press release that, “We are pleased to have reached this amended merger agreement with AMC, which follows extensive negotiations with AMC. 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.”

Carmike shareholders will be given the choice of either $33.06 in cash per share, or 1.0819 shares of AMC class A common stock for each Carmike share. The $1.2 billion transaction consists of approximately $585 million in cash along with $250 million of AMC Class A Common Stock, as well as the assumption of all of Carmike’s net debt by AMC.

The deal is expected to close by the end of 2016 and is subject to the customary regulatory and closing conditions, as well as the approval of Carmike’s shareholders. Carmike will adjourn its Special Meeting of Stockholders, which was originally scheduled to reconvene today at 9:00AM EST in Atlanta, Georgia.

Carmike will release a revised proxy statement/prospectus to Carmike shareholders related to the amended and restated merger agreement and will provide details on when the Special Meeting of Stockholders will be reconvened.

Other News About CKEC

Carmike Cinemas, Inc. – Value Analysis

A summary of Capitalcube’s analysis of Carmike Cinemas.

Carmike meets 1Q profit forecasts

Company reported a first quarter profit of $2.2 million.

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Published on Jul 25, 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 2020. Content published with author's permission.

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