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AMC investor sues board over $1.2 bln Carmike acquisition

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  • Suit comes as AMC faces class motion in Manhattan courtroom
  • Investor filed grievance Thursday after board rejected demand
  • Demand known as for unbiased investigation of sophistication motion claims

(Reuters) – AMC Entertainment Holdings Inc’s board has been hit with a by-product swimsuit in New York federal courtroom difficult the corporate’s dealing with of litigation over its $1.2 billion acquisition of Carmike Cinemas.

Investor John Lyon III sued the board members on Thursday in Manhattan after they refused his demand to independently examine claims made in a securities fraud class motion over the deal.

“Because the Board has constructively, wrongfully refused the Litigation Demand, Plaintiff now commences this derivative action in order to protect the Company, rectify the wrongs detailed herein, and hold the wrongdoers accountable for the damages they caused AMC,” Lyon mentioned.

Lyon’s lead legal professional, Melinda Nicholson of Kahn Swick & Foti, didn’t instantly reply to a request for remark. Neither did the Weil Gotshal attorneys representing AMC and its board within the class motion.

AMC introduced in March 2016 that it could buy Carmike, making the mixed firm the most important U.S theater chain. The buy worth was later upped to roughly $1.2 billion.

The deal closed after AMC agreed to the Department of Justice’s requirement that it divest theaters in sure markets.

Lyon’s by-product swimsuit got here after the movie show chain was sued in 2018 for allegedly failing to reveal details about Carmike’s monetary struggles.

The 2018 swimsuit survived a movement to dismiss and was certified as a category motion in March.

AMC and its board have denied wrongdoing.

Citing Manhattan-based U.S. District Judge Alison Nathan’s opinion within the class motion, Lyon mentioned the courtroom discovered a “strong inference” that AMC CEO Adam Aron knowingly made false statements and materially omitted details about Carmike’s underinvestment in its venues.

Those “damning” findings led him to ask AMC’s board in July 2020 to self-discipline and sue the individuals accountable for the alleged misconduct, in response to Thursday’s grievance.

The board rejected the demand in September 2020, arguing that following by on it may harm AMC’s protection of the category motion, the grievance says.

The case is John R. Lyon III v. Adam M. Aron et al, U.S. District Court for the Southern District of New York, No. 1:21-cv-07940.

For Lyon: Melinda Nicholson of Kahn Swick & Foti

Counsel info for the AMC board was not instantly identified.

Read extra:

AMC Entertainment to purchase Carmike in a deal valued at $1.1 bln

AMC wins U.S. antitrust approval to purchase Carmike Cinemas with situations

Sierra Jackson

Sierra Jackson stories on authorized issues in main mergers and acquisitions, together with deal work, litigation and regulatory modifications. Reach her at sierra.jackson@thomsonreuters.com

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