AMC Entertainment: Buying Opportunity Emerging, With Strong Fundamentals Intact
Johannes Salim, CFA
Johannes Salim, CFA
Fri, Jul. 15, 2:45 AM
- AMC Entertainment (NYSE:AMC) is exploring a potential sweetened bid for Carmike Cinemas (NASDAQ:CKEC) that would top its previous $1.1B offer, Reuters reports.
- The smaller movie theater chain said on Thursday it will continue to have ongoing discussions with AMC after it delayed a July 15 shareholder vote on its previous $30 per share offer.
- It was the second time Carmike postponed the vote, which is now set for July 25.
Thu, Jul. 14, 6:50 PM
- After it postponed a special shareholder vote to July 15 at the end of June, Carmike Cinemas (NASDAQ:CKEC) is again postponing its special meeting in light of ongoing talks with AMC (NYSE:AMC) about a merger deal.
- The meeting had first been planned for June 30, but amid some contentious talk between the sides it was moved to tomorrow. That meeting is now set for July 25 at 9 a.m. Atlanta time.
- After Carmike postponed the last meeting, with observers saying some Carmike shareholders wanted too rich a price, AMC chief Adam Aron said the $1.1B deal was in jeopardy because of the "loose price talk."
Thu, Jul. 14, 9:34 AM
- Niantic Labs appears set to allow businesses to officially sponsor locations for in-game activities for Nintendo's (OTCPK:NTDOY, OTCPK:NTDOF) Pokémon, according to media reports.
- That's not news to followers of Reddit posts which dug deep into the Pokémon code to discover bits with "McDonald's" already in it (see code here)
- Though the monetization of the Pokémon phenomenon was widely expected, it also has deeper implications for retailers even beyond trying to scrap for foot traffic through establishing Lure modules, PokeStops, and Pokemon Gyms. Pokémon may come and go. The intersection of real-world shopping and augmented reality games is probably here to stay.
- Companies with an eye on augmented reality and location-based entertainment as it relates to increasing traffic run far and wide. Restaurants (QSR, SBUX, MCD, CMG, WEN, NDLS, PNRA, DNKN), store chains (GPS, AEO, ANF, TGT, ROST, DG, DLTR), and movie theaters (AMC, CKEC, IMAX, CNK, RGC) come to mind.
- Google (GOOGL, GOOG) is also keeping track of all the Pokémon developments as it served as an incubator for Niantic Labs up until the Alphabet creation. Recode says it's unclear what stake that Google still has in the software developer.
- Pokémon news on Seeking Alpha
Wed, Jul. 13, 2:02 PM
- Wedbush Securities analyst Michael Pachter updates investors on its view on theater stocks with the back half of the year starting to ramp up.
- IMAX (NYSE:IMAX): Q2 results are forecast to arrive in-line with consensus estimates. A number of growth drivers -- including virtual reality, global growth, higher film volume, and laser projectors -- keep Wedbush locked in with an Outperform rating and $40 price target.
- AMC Entertainment (NYSE:AMC): Shares are rated at Outperform with a $33 price target. Though AMC is expected to lose market share in Q2, concessions and film rental margins are seen improving.
- Carmike Cinemas (NASDAQ:CKEC): Held at Neutral with a $30 price target. The AMC acquisition is seen closing by the end of the year.
- Cinemark Holdings (NYSE:CNK): Also rated at Neutral, the view on Cinemark is that a strong domestic performance will be muted by F/X pressure abroad.
- Regal Entertainment Group (NYSE:RGC): The investment firm expects in-line performance from the chain at the box office.
- Previously: U.S. box office up 1.3% YTD after 4th of July weekend (July 8)
Tue, Jul. 12, 7:38 AM
- AMC Entertainment (NYSE:AMC) says it remain committed to a potential acquisition of Carmike Cinemas (NASDAQ:CKEC).
- AMC CEO Adam Aron adds insight to the company's mindset below.
- “AMC remains committed to moving forward with our plan to acquire Carmike Cinemas.
- “Some Carmike shareholders 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 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. Therefore, the likelihood of an AMC/Carmike transaction continues to be at considerable risk."
- Earlier today, AMC announced the acquisition of with Odeon & UCI.
- Previously: AMC Entertainment to acquire Odeon & UCI Cinemas Group (July 12)
- Source: Press Release
Tue, Jul. 12, 7:06 AM
- AMC Entertainment (NYSE:AMC) announces today that it acquired London-based Odeon & UCI Cinemas Group from private equity firm Terra Firma in a transaction valued at approximately £921M ($1.211B). The purchase price is comprised of £500M for the equity, 75% in cash and 25% in stock consideration, subject to lock-ups, and the assumption of £407M of net debt.
- The transaction has been approved by both the Board of Directors of AMC and the shareholder of Odeon & UCI.
- The transaction is expected to be completed in the Q4 of 2016 and is conditional upon antitrust clearance by the European Commission and is subject to consultation with the European Works Council.
- Source: Press Release
Fri, Jul. 8, 10:32 AM
- The U.S box office is only up 1.3% through the 4th of July weekend compared to last year, according to an updated tabulation from BoxOfficeMojo.
- Drexel Hamilton says its the filler movies scheduled between blockbusters that are to blame for the sub-2% growth. The investment firm points to Sony's (NYSE:SNE) Money Monster as an example of the trend. The film was set up as a blockbuster gap filler (Julia Roberts, George Clooney, and Jodie Foster as director), but has only brought in $41M to date.
- What to watch: The exhibitor industry is desperate to hold on to the dinner-and-a-movie date concept with more data out suggesting that younger generations are skipping out on the latter half of the equation. Ticket pricing (+2% Y/Y) and concessions revenue per patron have been solid, but growing traffic steadily has been a challenge.
- Related stocks: CKEC, AMC, CNK, RLD, IMAX, RDI, MCS, NCMI.
Thu, Jun. 30, 12:53 PM
- Carmike Cinemas (NASDAQ:CKEC) postponed today's shareholder vote on a $1.1B buyout by AMC (NYSE:AMC), saying that was at AMC's request, prompting deal observers to speculate on a higher bid price in the face of key Carmike opposition. But AMC's chief says the deal's in jeopardy amid "loose price talk."
- “AMC Entertainment remains committed to our proposed transaction to acquire Carmike Cinemas. The rationale to acquire Carmike continues to be valid, namely to create a larger system of theaters nationwide," says AMC's Adam Aron. “Even so, this transaction is now at considerable risk.”
- Deal critics (which include top Carmike shareholders Driehaus and Mittleman Brothers) aren't accounting for tax implications and transaction costs, he told Variety.
- After rising 1.6% earlier, CKEC is back to just up 0.1%. AMC is up 1%.
Thu, Jun. 30, 9:41 AM
- Carmike Cinemas (CKEC +0.2%) has dropped today's shareholder vote on selling itself to AMC Entertainment Holdings (AMC -0.6%) for $1.1B, and postponing it to July 15.
- The move is at the request of AMC. Carmike had been said to be considering a postponement of voting on the deal due to market volatility, though some key Carmike shareholders have planned to vote no on the deal, and proxy advisers ISS and Glass Lewis also oppose the deal as structured.
- That means a raised AMC bid could be likely, with top Carmike shareholders saying the chain is worth more than bid.
- Carmike will reconvene its special meeting July 15 at 11 a.m. in Atlanta. The record date for voters is unchanged: May 18, 2016.
Wed, Jun. 22, 7:12 AM
- IMAX (NYSE:IMAX) and AMC Entertainment (NYSE:AMC) announce an expansion of the companies' existing full joint revenue sharing arrangement with the addition of 25 IMAX at AMC theaters.
- The theatres are expected to be installed in 2016 through 2019 at both existing and new–build AMC locations, with the majority of the IMAX at AMC theatres opening within the next two years. The cities include New York, Los Angeles and Houston as well as strategic smaller-tier markets that AMC and IMAX believe present further growth opportunities.
- Today's agreement brings AMC's total IMAX commitment to 185 theaters and reinforces its position as the largest IMAX exhibitor in North America.
- "We are delighted to further expand our partnership with our long-term partner, AMC. Today's deal is a further indication of the continued growth opportunities for IMAX in North America – where our box office grew by 87 percent in the first quarter, fueled by blockbuster titles such as Star Wars: The Force Awakens, Deadpool, and Batman v. Superman: Dawn of Justice," said IMAX CEO Richard L. Gelfond.
- Source: Press Release
Mon, Jun. 20, 7:37 AM
- Carmike Cinemas (NASDAQ:CKEC) reiterates the unanimous recommendation of its board for the proposed merger agreement with AMC Entertainment (NYSE:AMC).
- The action follow two major proxy advisory firms issuing a recommendation to shareholders to vote against the deal.
- Carmike statement: “The AMC agreement is the culmination of a nearly two-year strategic review process during which no other offers were made. The AMC agreement also resulted in the highest large-scale industry transaction multiple in the past 10 years, and provides value to our stockholders that is well above where Carmike’s stock has historically traded or where we expect Carmike’s stock to trade on a standalone basis within any time frame that would be acceptable to us, particularly in light of recent industry-wide downward trends."
- Shareholders are due to vote on the merger proposal at a special meeting set for June 30.
- Source: Press Release
- Previously: AMC Entertainment faces resistance in Carmike Cinemas pursuit (June 18)
Sat, Jun. 18, 3:36 PM
- Two significant proxy advisory firms recommend that shareholders at Carmike Cinemas (NASDAQ:CKEC) vote to reject the buyout offer from AMC Entertainment (NYSE:AMC).
- Glass Lewis and Institutional Shareholder Services think the $1.1B bid ($30/share) from AMC is too low. It's noted that a deal would also preclude Carmike shareholders from seeing the potential upside of the combined entity.
- Piper Jaffray warns that large CKEC shareholders Driehaus Capital and Mittleman Investment may also vote against the merger due to the low implied valuation. The investment firm wouldn't be surprised if AMC comes in with a new offer in the $32 to $33.50 range to try to close the deal.
- Carmike Cinemas closed at $30.12 on Friday.
Thu, Jun. 16, 7:30 AM
Mon, Jun. 13, 2:31 PM
- Credit Suisse initiates coverage on National CineMedia (NCMI -0.6%) with an Outperform rating.
- The investment firm assigns a price target of $21 to the theater advertising concern.
- AMC Entertainment (AMC -2.2%) catches an Outperform rating and $34 PT (+29% upside).
- Regal Entertainment (RGC -1.6%) is launched at Neutral with a $20 PT.
- Cinemark (CNK -1.3%) is lined up at Neutral with a $33 PT.
- The sector is under some selling pressure today due to the terrorist attack in Orlando.
Mon, Jun. 13, 9:30 AM
- The summer box office in the U.S. is off to a painfully slow start.
- Revenue for the May 6 to June 12 period fell 22% Y/Y to $1.24B, according to The Hollywood Reporter. The YTD box office tally is still up about 4% compared to last year.
- A failure of sequels to generate large interest with moviegoers has led to the summer slide.
- Major summer releases still on the way include Jason Bourne, Star Trek Beyond, Suicide Squad, and Independence Day: Resurgence.
- Related stocks: CKEC, CNK, RGC, MCS, RDI, AMC, IMAX, DCIN.
Thu, May 26, 7:12 PM
- Four Hollywood studios have now backed off from supporting the movie-exhibition practice called "clearance," which has drawn scrutiny (and lawsuits) from the Justice Dept.
- Movie theaters by tradition have asked studios to support the practice, allowing some of them exclusive access to showing some movies in a market.
- But with Lions Gate (NYSE:LGF) and Universal (NASDAQ:CMCSA) joining Paramount (VIA, VIAB) and Fox (FOX, FOXA, which has stopped honoring clearance starting with this weekend's X-Men: Apocalypse), a majority of major studios are now lined up against.
- That means some films may see wider or different distribution as theaters show them who wouldn't previously have been able to. And it may act as a check against increasingly powerful theater chains, including AMC, Regal (NYSE:RGC) and Cinemark (NYSE:CNK). Last year, iPic Entertainment sued AMC and Regal, charging that clearance was designed to drive business away; that case is scheduled for an October trial.
- Disney (NYSE:DIS), Warner Bros. (NYSE:TWX) and Sony Pictures (NYSE:SNE) haven't yet indicated any change in stance toward the practice, though.
AMC Entertainment Holdings, Inc. is principally involved in the theatrical exhibition business and owns, operates and has interests in theatres primarily located in the United States. The company owns and operates movie theatres, which are primarily located in major metropolitan markets. It... More
Industry: Movie Production, Theaters
Country: United States
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