Carmike Cinemas has pushed a shareholder vote on AMC Entertainment’s $1.1 billion (including debt) purchase offer scheduled for today back to July 25 citing “ongoing discussions” between the companies.
This is the second postponement of a vote, originally planned for June 30 — and seems to suggest that there’s something to a Reuters report last night that says AMC might sweeten its $30 a share offer.
Some of Carmike’s biggest shareholders have said that the current bid is too low, and vowed to vote against it. Investor advisors Institutional Shareholder Services and Glass Lewis also urged “no” votes.
“Clearly, [Carmike’s] Board continues to believe it does not have enough shareholder support to achieve the 50%+ needed to approve the acquisition,” says B. Riley analyst Eric Wold.
Up to now AMC chief Adam Aron said that he was prepared to walk away rather than pay more. The economics of the deal “get marginal very quickly for AMC above the $30 deal price,” he said this week. AMC is controlled by China’s Wanda Group.
Those wanting more “have an unrealistic view as to Carmike’s value to AMC, and their resulting price expectations are simply beyond what AMC believes is prudent to pay. We have said all along that AMC is a disciplined buyer, and that very much continues to be the case.”
He added that while he remained “committed” to the agreement after making a separate $1.2 billion cash and stock bid for UK-based Odeon & UCI Cinemas, “the likelihood of an AMC/Carmike transaction continues to be at considerable risk” if shareholders hold out for more.
With the Odeon & UCI pact, “we win with Carmike, and we win without Carmike,” Aron told analysts.
Carmike shareholders seemed to think that he was bluffing, that someone else might offer more, or that the company could do better by remaining independent. The stock closed yesterday at $30.59, above AMC’s offering price.
Wold says that he believes the gap between AMC and Carmike shareholders’ expectations “remains wide.”
AMC and Carmike say today that there’s no “assurances regarding the outcome of any discussions between Carmike and AMC regarding the previously announced merger agreement.”