A shareholder vote to approve AMC Entertainment Holdings Inc.’s $1.1 billion acquisition of Carmike Cinemas Inc. has been postponed following concerns among some Carmike shareholders that the sale price is too low.
The vote, which would have created the country’s largest movie-theater company, was scheduled for Thursday. But AMC called off the vote, saying the deal is at “considerable risk” following weeks of disagreement among some Carmike shareholders about whether the $30 a share purchase price undervalued the company.
The vote has been postponed to July 15, which gives AMC time to potentially boost the price and win over skeptical investors. But it noted that the financial perks of the deal get “very marginal” when the price rises above $30 a share.
“We are fully prepared to see the Carmike transaction pass by the wayside,” the company said.
AMC announced it was buying Carmike in March. The deal is considered the largest possible tie-up in domestic exhibition due to antitrust regulations. AMC is the nation’s second-largest exhibitor behind Regal Entertainment Group; Carmike is No. 4.
The deal was also another major step in a global exhibition strategy for AMC’s owner, China’s Dalian Wanda Group Co. Wanda has been building hundreds of theaters in China while also pursuing acquisitions in Australia, Europe and the U.S.
The $30 a share price was a 20% premium on the closing share price of Carmike stock on the day of the announcement. After the deal was announced, Carmike’s two largest shareholders, Mittleman Brothers LLC and Driehaus Capital Management LLC, said the $30 price was too low. Two shareholder advisory firms voiced opposition to the deal earlier this month.
The key opponents to the deal are seeking a significant price increase. A Mittleman executive said Thursday the firm would vote against any cash offer from AMC of less than $40 a share. Driehaus said it estimates Carmike to be worth between $43.50 and $47.25 a share in a cash deal.
Defending its offer has put AMC in the awkward position of having to point out the liabilities of the acquisition.
In its statement Thursday, AMC countered that the price concerns didn’t take into account divestitures and other regulatory requirements of the deal that reduce Carmike’s value.
The statement also noted that the industrywide box office has gone down since the acquisition was announced.
