Carmike Cinemas Inc fka CKEC

[Enterprising Investor]

AMC to Buy Europe’s Odeon & UCI in Deal Helped by Weaker British Pound (7/12/16)

Carmike deal at risk because of ‘unrealistic view’ of value, U.S. theater chain says

By Austen Hufford

AMC Entertainment Holdings Inc. said Tuesday that it would acquire European movie theater operator Odeon & UCI Cinemas Group for about £500 million ($650 million) in a deal helped by the weaker British pound following the U.K.’s vote to leave the European Union.

AMC said while there are “some uncertainties” related to the Brexit vote, the decades-low exchange rate between the U.S. dollar and British pound made the deal highly favorable to AMC.

The deal comes as the U.S. theater chain works to close its delayed deal for Carmike Cinemas Inc. AMC warned that its $1.1 billion deal to buy Carmike remains at “considerable risk” because some shareholders have an “unrealistic view” of Carmike’s value to AMC.

AMC said the deal to buy Odeon & UCI would make it the world’s largest movie theater operator. Odeon & UCI operates 2,236 screens in 242 theaters across seven European countries, including in the U.K., Spain and Italy. AMC has 385 locations and 5,380 screens located primarily in the U.S.

AMC is buying the European theater operator from private-equity firm Terra Firma in a deal valued at about £921 million, including £407 million in debt. The equity part of the deal comprises 75% stock and 25% cash.

The deal is expected to close in the fourth quarter of the year and is subject to antitrust clearance by the European Commission and to consultation with the European Works Council.

“This is a once-in-a-generation opportunity to acquire Europe’s leading cinema chain,” AMC Chief Executive Adam Aron said.

London-based Odeon will continue to be based there and will retain its brand names.

AMC is working to acquire U.S.-based Carmike. Last month, a shareholder vote to approve that deal was postponed following concerns among some Carmike shareholders that the sale price was too low.

AMC said Tuesday it remains committed to the Carmike deal.

“We intend to continue to work this week with Carmike to see if the AMC/Carmike transaction can be saved, but we again note that the economics of a transaction get marginal very quickly for AMC above the $30 deal price,” the company said.

Shares of Carmike, up nearly 30% over the past 12 months, fell 1.7% to $29.23 in premarket trading. AMC shares were inactive at $27.77.

http://www.wsj.com/articles/amc-to-buy-odeon-uci-says-carmike-deal-in-jeopardy-1468325014