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Driehaus Capital Seeks Higher Price for Carmike Cinemas

According to a newly-amended 13D filing, Richard Driehaus’ Driehaus Capital Management LLC currently owns 2.43 million shares of Carmike Cinemas Inc. (NASDAQ:CKEC), which represent 9.90% of the company’s outstanding common stock. This represents an increase from the stake of 1.97 million shares disclosed in the initial 13D filing on the company, submitted with the SEC at the end of March. Both the amended and original filing reveal that Driehaus Capital acquired the shares of the U.S. motion picture exhibitor because they were undervalued. Precisely, Mr. Driehaus’ investment firm believes that shareholder value “can be unlocked by exercising their voting rights with respect” to the pending merger transaction with the second-largest U.S. theater chain AMC Entertainment Holdings Inc. (NYSE:AMC), which is controlled by Chinese private conglomerate Dalian Wanda Group. In early March, AMC agreed to acquire Carmike Cinemas for $30.00 per share in cash, but Driehaus Capital believes that this offer “meaningfully undervalues” the fourth-largest U.S. exhibitor. Nonetheless, Mr. Driehaus and his team acknowledge that the possible merger between the two companies represents “a unique opportunity for AMC to gain substantial scale”, but a more realistic purchase offer would be in the range of $43.50 to $47.25 per share. Mittleman Brothers LLC, which has an 8.4% stake in Carmike Cinemas Inc. (NASDAQ:CKEC), has also voiced its disagreement with the $30-offer, saying that Carmike is worth a minimum of $35 per share to $40 per share “before the huge synergies of a merger with AMC”. There were 22 hedge funds tracked by Insider Monkey with stakes in Carmike Cinemas, amassing nearly 18% of the company’s shares. Charles Paquelet’s Skylands Capital owns 44,150 shares of Carmike Cinemas Inc. (NASDAQ:CKEC) as of March 31.