Carmike Stockholders Approve Merger Agreement With AMC
November 15 2016 - 8:50PM
Dow Jones News
Carmike Cinemas Inc. shareholders on Tuesday approved a merger
with AMC Entertainment Holdings Inc., creating the world's largest
movie-theater chain.
More than 86% of votes cast by Carmike shareholders approved the
$1.2 billion deal, which initially faced shareholder resistance
when it was announced in March. AMC, which is majority-owned by
China's Dalian Wanda Group Co., offered $33.06 a share and some AMC
stock in the deal.
AMC had been the nation's second-largest theater chain with
about 388 locations; Carmike was No. 4 with 273. The previous No. 1
exhibitor, Regal Entertainment Group, has 565 theaters.
Their tie-up means that Regal Entertainment Group would be
bumped from first place in domestic theater rankings. The deal
still needs to be approved by the Justice Department and is
expected to be completed by the end of this year or early 2017.
AMC is completing a second deal worth $650 million to acquire
Europe's Odeon & UCI Cinemas Group. The Odeon and Carmike deals
will increase AMC's footprint to about 900 theaters.
Wanda bought AMC in 2012 for $2.6 billion. Since then, the
exhibitor has spent hundreds of millions of dollars renovating its
theaters with wide recliners and full-service kitchens. The concept
was initially met with skepticism in the industry but has since
taken off and has been replicated by competitors. AMC executives
said they plan to bring the features to Carmike locations.
Carmike has been a takeover target for years. It operates in
more rural locations than AMC, which should help the deal clear
antitrust scrutiny, though some divestitures are expected.
Following the deal, some Carmike locations will take the AMC brand,
while others will either retain the Carmike brand or adopt another
name entirely.
AMC initially offered $30 a share, or $1.1 billion, for Carmike.
Major shareholders pushed back, saying the terms undervalued the
company. AMC's sweetened offer—and the arrival of arbitrage firms
who bought AMC stock hoping for a quick bump in price—helped get
the votes the company needed on Tuesday.
In the four years since its AMC purchase, Wanda has expanded its
Hollywood footprint with acquisitions that include the $3.5 billion
purchase of Legendary Entertainment and $1 billion deal to acquire
Dick Clark Productions.
Wanda's new position as the No. 1 exhibitor in North America
comes as the exhibition industry's dynamics are shifting around the
world and the company stakes out territory in the two most
important markets.
The Beijing-based real-estate conglomerate also controls
thousands of screens in China. Analysts this month said China would
have more screens than any other market starting some time this
week. IHS Markit researchers expect the theater count in China to
pass the U.S. on Nov. 16, according to a report released last week,
marking the first time the U.S. isn't the world's largest cinema
market. The value of the Chinese box office remains second to the
U.S., and is expected to remain there until 2019.
China had 39,194 screens at the end of September, while the U.S.
had 40,475. China is building screens at a rate of 27 a day, the
analysts said.
Chinese box-office grosses were once expected to surpass the
U.S. sometime next year, but a recent slowdown has pushed that
projection back to 2019, according to IHS.
Write to Erich Schwartzel at erich.schwartzel@wsj.com
(END) Dow Jones Newswires
November 15, 2016 20:35 ET (01:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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