Carmike Cinemas (CKEC) Might be Priced Right to Attract Buyers
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Carmike Cinemas Inc. (Nasdaq: CKEC) may have the value and footprint to attract a takeover bid.
Bloomberg notes Friday that Carmike, which runs 2,500 screens nationwide, has an enterprise value of $476 million and trades for 5.5 times EBITDA, versus a median of 8.3 times among its peers.
Potential companies that might take a look include Regal Entertainment Group (NYSE: RGC), Cinemark Holdings Inc. (NYSE: CNK), and AMC.
Though ticket sales of $10.6 billion last year are down from record levels hit in 2002, M&A makes sense. Larger brands could snap-up Carmike, which would grant access to small-town locations and are equipped with 3-D technology, then get better negotiating leverage when it comes to movie-rental and food vendor rates.
Regal has about $395 million of cash while Cinemark reported holding about $743 million at the end of last year.
One speed bump is Carmike CEO David Passman, who said on a conference call recently that he'd like to build the chain out from 244 theaters and 2,464 screens to 300 units with 3,000 screens. He doesn't have dividend plans and would rather keep cash for takeovers.
Then again, a "blockbuster" deal isn't something most would shy away from. Shares of Carmike are up 5.2 percent.
Bloomberg notes Friday that Carmike, which runs 2,500 screens nationwide, has an enterprise value of $476 million and trades for 5.5 times EBITDA, versus a median of 8.3 times among its peers.
Potential companies that might take a look include Regal Entertainment Group (NYSE: RGC), Cinemark Holdings Inc. (NYSE: CNK), and AMC.
Though ticket sales of $10.6 billion last year are down from record levels hit in 2002, M&A makes sense. Larger brands could snap-up Carmike, which would grant access to small-town locations and are equipped with 3-D technology, then get better negotiating leverage when it comes to movie-rental and food vendor rates.
Regal has about $395 million of cash while Cinemark reported holding about $743 million at the end of last year.
One speed bump is Carmike CEO David Passman, who said on a conference call recently that he'd like to build the chain out from 244 theaters and 2,464 screens to 300 units with 3,000 screens. He doesn't have dividend plans and would rather keep cash for takeovers.
Then again, a "blockbuster" deal isn't something most would shy away from. Shares of Carmike are up 5.2 percent.
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