Carmike Cinemas’ largest stockholder plans to oppose the $1.1 billion sale of the movie theater company to Leawood-based AMC Entertainment Holdings because the price is too low.
“We intend to vote against, and to encourage other shareholders to vote against, the merger agreement,” Mittleman Brothers, which holds 7.1 percent of Carmike, said Tuesday in a regulatory filing.
The price of $30 a share is “unacceptably low,” the company said, suggesting $40 is fair value.
AMC didn’t respond to a request for comment.
The opposition throws a potential wrench into AMC’s plans to become the world’s largest cinema chain by acquiring Carmike. The companies announced an agreement last week for AMC, the No. 2 U.S. exhibitor, to buy No. 4 Carmike.
AMC is majority owned by Dalian Wanda Group, led by China’s richest man, Wang Jianlin.
“I don’t see any reason why AMC would feel compelled to raise their offer just because of a shareholder letter indicating they thought it was too low,” said Eric Wold, a B. Riley & Co. analyst who follows both companies. “If shareholders vote against the deal, then maybe AMC would come back with a higher offer.”
Wold agreed with Mittleman that the $30 price is low. He downgraded Carmike to neutral, saying that while there is a possibility of a counteroffer, there are also regulatory risks for the current agreement.