AMC Theatres to Acquire Carmike in Sweetened $1.2 Billion Deal

AMC Theaters Exterior GETTY H 2016
Getty Images

The companies had previously agreed to a $1.1 billion deal that drew opposition from some shareholders.

Carmike Cinemas said Monday that it has entered into an amended and restated agreement to be acquired by AMC Theatres for $1.2 billion in cash and stock and including debt.

The companies had previously agreed to a $1.1 billion deal, or $30 per share, that drew opposition from some shareholders. The new deal is worth $33.06 per share, or 10.2 percent more.

AMC president and CEO Adam Aron in an analyst call on Monday pitched his company's "best and final" offer to Carmike shareholders. "This is it. We're done. There's no more water in this well," he warned, before adding AMC was prepared to walk away from the Carmike acquisition deal and focus on its separate proposed takeover of Odeon & UCI in Europe.

"Without Carmike ... AMC will still be a terrific company. If that winds up being the path we walk, so be it," said Aron. Under the terms of the new agreement, Carmike shareholders will have the option to elect to get either $33.06 in cash or 1.0819 shares of AMC’s Class A common stock.

Aron argued Carmike shareholders now get a higher price tag for their company and equity in the world's largest exhibitor, should the proposed Carmike and Odeon & UCI acquisitions go ahead. "That puts us in position to be seen as the leader in this industry," he told analysts. 

The $1.2 billion transaction value consists of approximately $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. The total consideration to be received by Carmike stockholders under the amended and restated merger agreement represents a premium of approximately 32 percent over Carmike’s stock price on March 3, the last date prior to the announcement of the transaction between AMC and Carmike.

A shareholder meeting to vote on the deal was set for Monday, but will be pushed back. Aron said in an earlier statement the proposed merger remained a "compelling opportunity that offers significant value to both companies’ shareholders."

He added: "By broadening AMC’s geographic and demographic base for delivering our groundbreaking guest experience innovations, AMC is poised to deliver the best possible movie experience to more moviegoers than ever before."

In his own statement, Carmike president and CEO David Passman 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. Our board unanimously believes that this transaction is compelling and in the best interest of all Carmike stockholders.”

Aron told analysts AMC will not have to pay a break-up fee if the amended offer for Carmike is voted down by shareholders. The AMC chief said he also has talked to dissident investors about the raised offer, but had no idea how they will ultimately vote.

"How they react to the new offer is unknown to us. We will all find out together," he said. "The good news here is there's no ability for people to speculate, or play game theory about what AMC will do. We know what AMC will do, and this is the last thing AMC will do," Aron added, yet again closing the door on another raised offer for Carmike.

July 25, 11:55 a.m.: Updated with comments from AMC president and CEO Adam Aron from an analyst call.

Etan Vlessing in Toronto contributed to this report.