Robbins Arroyo LLP: Acquisition of Carmike Cinemas Inc. (CKEC) by AMC Entertainment Holdings Inc. (AMC) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP are investigating the proposed acquisition of Carmike Cinemas Inc. (NASDAQ: CKEC) by AMC Entertainment Holdings Inc. (NYSE: AMC). On March 3, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which AMC Entertainment will acquire Carmike. Under the terms of the agreement, Carmike shareholders will receive $30.00 in cash for each share of common stock.
Is the Proposed Acquisition Best for Carmike and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Carmike is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $30.00 merger consideration is significantly below the target price of three analysts ranging from $36.00 set by an analyst at Topeka Capital Markets Inc. on January 12, 2016 to $33.00 set by an analyst at B. Riley & Co. on March 1, 2016. In the last three years, Carmike traded as high as $36.22 on June 10, 2014, and most recently traded above the merger consideration – at $30.29 – on May 7, 2015.
On February 29, 2016, Carmike reported strong earnings results for its fourth quarter 2015. Total operating revenues for the quarter were $220.7 million, an increase of 19% compared to the same period last year. Net income for the quarter was $6.9 million, an increase of 413% compared to the same period last year. Additionally, Carmike has beat consensus analyst estimates for sales in three out of its last four quarters. In commenting on these results, Carmike Chief Executive Officer David Passman remarked, “Carmike’s record fourth quarter and 2015 full year financial results reflect the ongoing success of our theatre-level initiatives, the progress we are achieving with our value-building theatre acquisition and organic growth strategies and the overall strength of the U.S. box office. Our admissions revenue growth per screen of over 15% in the 2015 fourth quarter and 9% for the full year, outpaced the industry by almost 500 and 200 basis points, respectively. We achieved record results across several key financial metrics, including a 19% rise in operating revenues to an all-time quarterly record, as well as a rise in operating income of over 100%, which drove increases in adjusted EBITDA and theatre level cash flow of approximately 61% and 51%, respectively.”
In light of these facts, Robbins Arroyo LLP is examining Carmike’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Carmike shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Carmike shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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