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Carmike Cinemas ( CKEC) is continuing talks with AMC Entertainment ( AMC) , presumably in order to arrive at a deal price that key investor groups will support.
Carmike announced Thursday evening it would postpone Friday's special shareholder meeting to vote on AMC's $740 million, $30 per share offer. The new meeting date will be July 25 at 9 a.m.
The original deal has been opposed by funds Mittleman Brothers and Driehaus Capital Management, which control 9.5% and 9.9% of Carmike, respectively. Driehaus said it would seek appraisal in court rather than accept the offer.
This is the second time Carmike has postponed a vote on AMC's offer. A vote scheduled for June 30 was also postponed due to the opposition from Mittleman and Driehaus. The funds have said AMC's offer woefully undervalues Carmike and the target should remain a stand-alone company unless something north of $40 per share is offered.
AMC has maintained it won't offer anything near that amount.
Mittleman said Friday that it fears AMC will stick to that line. "Another delay would not be concerning if the intent behind it was to negotiate a truly fair deal, but that is not what we're hearing," the fund said in a statement. The bump will likely be to around $33, Mittleman said.
Mittleman said it also fears Carmike will try to move the record date necessary to vote on the deal from May 18. Allowing more recent shareholders to vote would be a "cynical lure to quick-buck artists, but otherwise a non starter that any sentient shareholder should reject emphatically." The fund said the move would be likely to provoke litigation.
When the vote was first postponed on June 30 the fund was quick to criticize that move. "AMC and Carmike's board are choosing to draw out the process rather than allowing the vote to occur on schedule and properly heeding the will of the company's shareholders to terminate this fatally flawed transaction," Mittleman said in a June 30 press release.
Driehaus said it would not comment on the new delay.
While it is expected that AMC and Carmike reached out to the investor funds before postponing Friday's vote, the situation is described as fluid and there is no agreement yet on a new price. In its announcement of the delay Carmike said, "There can be no assurances regarding the outcome of any discussions between Carmike and AMC."
Carmike shares opened Friday at $31.11, up sharply from Thursday's close of $30.59. Through trading Friday morning they lost some ground and stood at $30.79 around 11 a.m.

The critics contend that the auction process was too limited, that Carmike's 18% stake in theater advertising company Screenvision Cinema Network LLC is not included in AMC's bid, and that Ebitda projections used to value the deal appear low. The opposing shareholders have said that comparable deals in the theater business have been struck at higher Ebitda multiples than AMC's bid reflects.

Carmike has argued that it trades at a discount to other cinema operators because of its rural footprint.

Proxy solicitors Institutional Shareholder Services and Glass, Lewis & Co. have supported the dissidents.

Earlier this week Mittleman said AMC's July 12 announcement of a deal to buy to buy Europe's largest movie theater group Odeon & UCI Cinemas Holdings Ltd. for a valuation of about £921 million ($1.2 billion) proves that the Carmike offer is too low. The fund said if Carmike received a similar valuation AMC would be offering $47.69 per share.