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.
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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.
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.
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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