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AMC president and CEO Adam Aron in a statement said his company remained “committed to our proposed transaction” to create the biggest global theater circuit. “Even so, this transaction is now at considerable risk,” he insisted.
By combining its 5,426 screens with Carmike’s 2,954 screens, Chinese-owned AMC will have more than 600 theater locations in 45 states across the country should the sale go ahead. But concern by major shareholders that AMC’s $30 per share offer for Carmike isn’t rich enough prompted shareholders to postpone a vote.
Aron said he asked Carmike to delay the June 30 shareholder vote to July 15, “giving time for all concerned to determine if this transaction will be preserved or instead abandoned.” The AMC chief added major shareholders had not weighed one-time costs and other transaction charges when putting a value on the Carmike deal.
“Additionally, the public discussion to date has erroneously neglected to factor in that the Carmike transaction’s value to AMC is materially reduced by the value leakage from regulatory driven theater and other potential divestitures, tax implications regarding the receipt of National CineMedia Inc. founders shares and required annual make-whole payments to be made to NCM, as well as significant company integration and transaction costs,” Aron said.
Some analysts expect AMC could be forced to unload some of its theaters where there is especially high market concentration. AMC agreed to divest some theaters when it earlier acquired Starplex Cinemas.
Aron added that his company is a “disciplined” buyer unlikely to be moved by calls to raise the deal price tag. “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,” the AMC chief said.
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