OREANDA-NEWS. AMC Theatres (AMC Entertainment Holdings, Inc.) (NYSE: AMC) (“AMC”) announced today that it has entered into an amended and restated merger agreement pursuant to which AMC will acquire all outstanding shares of Carmike Cinemas, Inc. (NASDAQ: CKEC) (“Carmike”) for $33.06 per share in cash and stock. The amended merger agreement represents AMC’s “best and final” offer. The revised offer provides an additional $3.06 per share or 10.2% more than the previous offer. Carmike stockholders can elect to receive $33.06 in cash or 1.0819 AMC shares per Carmike share, subject to a customary proration mechanism to achieve an aggregate consideration mix of 70% cash and 30% in shares of AMC stock. The revised offer represents an approximate 32% premium to Carmike’s March 3, 2016, closing stock price. Based on the closing trading price of AMC’s common stock on the New York Stock Exchange on July 22, 2016, the transaction is valued at approximately $1.2 billion, including the assumption of Carmike net indebtedness.

Adam Aron, CEO and President of AMC, said, “We continue to believe that the proposed merger between AMC and Carmike is a compelling opportunity that offers significant value to both companies’ shareholders. Accordingly, after substantial and extended negotiation with Carmike, we have increased our offer to an approximate 32% premium over the unaffected share price on March 3, 2016, and have incorporated AMC shares as a significant portion of the consideration for this transaction. This will enable Carmike shareholders to participate in the future upside potential of this attractive combination of complementary theatre exhibitors. This is particularly true when also considering AMC’s announced acquisition of Odeon & UCI Cinemas in Europe. 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 movie-goers than ever before.”

Aron remarked, “Some Carmike stockholders may still oppose this transaction because of published analysis that we believe is materially flawed. For example, movie theatre transactions in Europe and Asia/Pacific are erroneously cited as comparables for the Carmike purchase, even though the major U.S.-based theatre operators trade every day on U.S. exchanges at considerably lower multiples. As another example, some take AMC’s tax NOL’s and apply them to the Carmike transaction, even though we have alternate uses for these credits. As such, they understate the incremental cash tax cost to AMC. Similarly ignored are the sizable transaction and company integration costs, as well as the leakage that will occur with the theatres that AMC is forced to divest after regulatory review.”

Aron further added, “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. While we would like this transaction to go forward, we are fully prepared to focus instead only on the improving fortunes of AMC and on our Odeon & UCI acquisition in Europe if a majority of Carmike shareholders do not find this revised offer attractive. In our view it would be very unfortunate if this transaction were to break which would deprive Carmike stockholders of the approximate 32% premium that AMC is offering.”

Key Benefits of the Transaction

  • The transaction is expected to produce annual cost synergies of approximately $35 million. Other key benefits of the transaction include: Diversifying AMC’s footprint by adding theatres with complementary geographic and guest demographic profiles that strengthen the combined company’s admissions growth potential with limited geographic overlap;
  • The reduction of related General and Administrative expenses by combining back-of-the-house functions such as accounting, finance and technology. The result is a more efficient and effective competitor through greater scale, scope and expertise. The combined company will be headquartered in Leawood, Kansas. Adam Aron will serve as Chief Executive Officer and President, and Craig Ramsey will serve as Executive Vice President and Chief Financial Officer;
  • The expansion of AMC’s proven and successful guest experience strategies to millions of new guests in complementary markets;
  • Combined with AMC’s announced acquisition of Odeon & UCI Cinemas in Europe, this transaction further increases AMC’s world’s largest movie theatre platform;
  • Expects to maintain quarterly dividend;
  • The receipt of substantial additional value in NCM LLC, a subsidiary of National CineMedia, Inc. (NASDAQ: NCMI), subject to taxes and make whole payments.

Approvals and Timing

The revised offer was approved by both Boards of Directors of AMC and Carmike, respectively.

The transaction is expected to be completed by the end of 2016, subject to customary closing conditions, including regulatory approval and approval by Carmike’s shareholders.

Additional Details

The transaction, which has fully committed financing in place, will be funded through a combination of existing liquidity, including cash on hand, incremental debt, and equity issuance. The debt financing commitment is being provided by Citigroup Global Markets Inc. (“Citi”).

Citi is serving as exclusive financial advisor to AMC and Husch Blackwell LLP is serving as AMC’s lead legal advisor.

About AMC Theatres

AMC (NYSE: AMC) is the guest experience leader with 385 locations and 5,380 screens located primarily in the United States. AMC has propelled innovation in the theatrical exhibition industry and continues today by delivering more comfort and convenience, enhanced food & beverage, greater engagement and loyalty, premium sight & sound, and targeted programming.