- New deal terms represent 10% increase over prior terms
- $33.06-a-share offer may not be enough for holders seeking $40
AMC Entertainment Holdings Inc., controlled by Chinese billionaire Wang Jianlin, sweetened its offer to buy Carmike Cinemas Inc. by about 10 percent to $1.2 billion, seeking to persuade holdout shareholders to accept the takeover.
Carmike investors will get the choice of receiving $33.06 in cash or 1.0819 shares of AMC’s Class A common stock, Leawood, Kansas-based AMC said in a statement today. The deal, which also includes the assumption of Carmike’s net debt, represents a premium of about 32 percent over Carmike’s stock price on March 3 -- the day before the original transaction was announced.
The companies agreed in March to a $30-a-share cash accord that would create the world’s largest cinema chain and extend Chinese influence in the movie industry. But Carmike’s two largest shareholders -- Mittleman Brothers and Driehaus Capital Management -- have opposed the deal and have said the company is worth $40 a share or more, creating an obstacle to Wang’s global ambitions.
“Some Carmike stockholders may still oppose this transaction because of published analysis that we believe is materially flawed,” AMC Chief Executive Officer Adam Aron said in the statement. “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.”
AMC agreed earlier this month to acquire U.K. cinema chain Odeon & UCI Cinemas Group for $1.2 billion, and said it was still willing to save the Carmike transaction if it could reach acceptable terms.
Evan Newman, a spokesman for Mittleman Brothers, declined to comment on AMC’s boosted bid. He referred to a July 15 statement that said a $33-a-share offer would be “grossly inadequate,” with or without the inclusion of AMC stock. “It would be a cynical lure to quick-buck artists, but otherwise a non-starter that any sentient shareholder should reject emphatically,” Mittleman said in the statement. “We would view any change in the record date to be utterly indefensible and likely to provoke litigation.”
Bradley Dawson, a Driehaus spokesman, declined to comment. Driehaus and Mittleman together own about 20 percent of Carmike, according to data compiled by Bloomberg.
Carmike postponed a shareholder meeting Monday and will schedule a new one to vote on the amended terms.
Citi is advising AMC and Husch Blackwell LLP is the theater chain’s lead legal adviser. JPMorgan Chase & Co. is providing advice to Carmike, with King & Spalding LLP offering legal help.