National CineMedia has announced that after a thorough review of options, it has agreed with SV Holdco and Screenvision to terminate the Merger Agreement signed May 5, 2014, that would have combined NCM and Screenvision.
In November 2014, the Department of Justice filed suit seeking to block the merger. NCM and Screenvision together determined that the ongoing cost and distraction of the suit to their employees, advertisers and exhibitor partners could no longer be justified and that both companies would be better served pursuing their independent businesses as standalone companies.
“NCM has created a highly effective offering in the hyper-competitive video advertising marketplace through the power of our world-class entertainment content; premium video ratings; national reach; scalable, state-of-the-art content distribution technology; and integrated digital marketing products. While I am disappointed that our shareholders and our advertising clients and exhibitor partners will not realize the benefits of a merger with Screenvision, I remain confident in our ability to continue to innovate and build our business,” said Kurt Hall, NCM’s chairman and CEO.
The termination of the Merger Agreement is effective upon the company’s payment of a $26.84 million termination payment, which NCM has agreed to make within the next 10 business days. This payment is $2 million lower than the reverse termination fee contemplated by the Merger Agreement. NCM has agreed to indemnify its parent company for the termination payment as well as other costs incurred in connection with the transaction. The company and the founding member theatre circuits each will bear a pro rata portion of this fee based on their aggregate ownership percentages in the parent company. The total after tax cash cost for NCM, Inc. related to the proposed merger with Screenvision including the termination fee and all legal and other expenses is projected to be approximately $11 million.
National CineMedia www.ncm.com