AMC in final bid for Carmike
The Chinese-owned theater chain offers $1.2 billion for the rival cinema company.
Chinese-owned theater chain AMC Entertainment has boosted its offer to buy rival Carmike Cinemas in a move to keep the closely watched deal from falling apart.
Leawood, Kan.-based AMC agreed Monday to pay $33.06 a share for Carmike of Columbus, Ga., a 10% increase from what the company offered when it first announced the transaction in March.
The new cash-and-stock pact is valued at $1.2 billion, including debt, up from $1.1 billion previously.
AMC, the second-largest U.S. theater circuit, said the revised offer would be its final bid for No. 4 chain Carmike. If the deal fails, it would be a setback for AMC’s expansion plans, although the firm’s leadership has brushed off the negative impact.
“While we would like this transaction to go forward, we are fully prepared to focus instead only on the improving fortunes of AMC,” Chief Executive Adam Aron said in a statement.
Wall Street seemed largely indifferent to the latest development. AMC’s shares fell 23 cents, or about 1%, to $30.37. Carmike also declined 1% to $30.77 a share.
The sweetened deal comes after some vocal Carmike shareholders protested that the initial offering price was too low. Carmike has twice delayed a shareholder vote to approve the acquisition, raising questions about whether the purchase would close. Both companies’ boards have already given the green light.
“It is very hard to ascertain the likelihood of the deal succeeding,” said Benjamin Mogil, a Stifel analyst who follows the movie business.
By buying Carmike, with 274 locations, AMC would expand its reach to 653 theaters. The combined chain would surpass Regal Entertainment Group for largest in the nation.
If the deal goes through, AMC is expected to apply its strategy of renovating and improving its theaters to Carmike’s locations to draw more customers.
The U.S. film industry has suffered from long-term stagnation in attendance in recent years. Increases in domestic box office grosses are partly the result of rising ticket prices.
Although the Carmike deal remains in question, AMC has not stood on the sidelines.
AMC this month announced plans to acquire London-based Odeon & UCI Cinemas Group from a private-equity firm to boost its business overseas.
Odeon & UCI operates 242 theaters, totaling 2,236 screens. If that European deal closes, AMC would become the world’s largest movie theater operator.
AMC was acquired by Chinese real estate and media conglomerate Dalian Wanda Group in 2012 for $2.6 billion, creating the world's largest cinema company. Wanda owns the biggest chain in China, where the theater business continues to boom.