Why Regal Entertainment Group Shares Rose 24% in November

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What happened

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Shares of Regal Entertainment (NYSE: RGC) gained 23.6% in November 2017, according to data from S&P Global Market Intelligence. The gains were sparked by a early talks of a buyout deal.

So what

Near the end of November, the movie theater chain started to hammer out a takeover deal with British peer Cineworld. Mere rumors of this potential deal were enough to drive Regal's share prices 10% higher, with another 6% boost when the company confirmed the hearsay. Cineworld presented a $5.9 billion buyout offer in early December, triggering a final 9.2% jump in Regal's market value.

Now what

The Cineworld deal has been approved by the boards of both companies, and the privately held Anschutz Corporation already signed a statement in support of this transaction. Anschutz holds 67% of Regal's total voting power, but the published support from Cineworld shareholders is a bit smaller so far, and the deal still has to go through regulatory approvals.

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That being said, there's no real reason to believe that Cineworld's bid would stumble on these minor speed bumps, nor that any competing offers would spark a bidding war. If anything, the deal could fall apart if the smaller Cineworld fails to drum up $4 billion of new debt and $2.3 billion in share offerings to finance its Regal ambition.

If you picked up Regal shares on the cheap in August, you could walk away with a 65% return on your investment today. Not too shabby for a stock that has trailed the general market over the last one, three, and five years.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.