Regal Entertainment Group Merger
Regal Entertainment Group Statement Regarding Potential Merger
On November 28, 2017, Regal Entertainment Group issued a press release which stated, in pertinent part:
Regal Entertainment Group, a leading motion picture exhibitor owning and operating one of the largest theatre circuits in the United States . . . confirmed that it is currently engaged in discussions with Cineworld Group plc about a possible all-cash acquisition of Regal at a price of $23.00 per share. No agreement has been reached, and there is no assurance that any transaction will result. Regal Entertainment Group does not intend to make any further comment, or respond to any inquiries, until an agreement, if any, is reached, or discussions have been terminated.
Bloomberg Reports: “Regal Cinemas Is in Talks for Merger With U.K.’s Cineworld”
According to a November 28, 2017 Bloomberg story:
U.K.’s Cineworld Group . . . is in talks to purchase Regal Entertainment Group, the U.S. movie-theater chain controlled by billionaire Philip Anschutz, for about $3.6 billion to tap into the world’s largest market and create a bigger rival to industry leader AMC Entertainment Holdings Inc.
Negotiations concerning a price for Regal of $23 a share may still fall apart, the companies said in separate statements, confirming reports Tuesday by Reuters and Bloomberg. Cineworld declined as much as 17 percent, the most in a decade, after saying it would fund the acquisition with a stock sale and debt. Regal gained as much as 7 percent.
. . .
Regal and fellow U.S. theater chains are under pressure as movie attendance has stagnated and many films this year have failed to meet expectations at the box office. The summer season — usually the most lucrative for the industry — was the worst since 2006.
Knoxville, Tennessee-based Regal had been valued at $2.83 billion based on trading early Tuesday, while Cineworld had a market capitalization of 1.6 billion pounds ($2.15 billion). Shares of Regal surged as much as 17 percent Tuesday before being halted, and were up 5 percent to $20.61 at 9:53 a.m. Wednesday in New York.
Cineworld plunged 17 percent to 575 pence in London.
“We believe $23/share will probably not cut it with RGC’s board, and it would not surprise us to see a revised offer,” David Miller, an analyst at Loop Capital Markets, said in a note. [Emphasis Added]
. . .
Execution risk is probably playing into Cineworld’s Wednesday share slide, as shareholders await clarity on the benefits of the deal and how the company can squeeze value from the purchase, as well as how much equity they will raise, Shirley said. Investors may also be wary of jumping into a U.S. market that’s been weak, he said.
Regal Entertainment Group Signs Definitive Agreement to be Acquired by Cineworld Group plc
On December 5, 2017, Regal Entertainment Group stated () that
. . . it has entered into a definitive merger agreement . . . with Cineworld Group [plc] . . . for Cineworld, the U.K.’s largest cinema operator, to acquire Regal, a leading motion picture exhibitor owning and operating one of the largest theatre circuits in the U.S. Under the terms of the Agreement, Regal [Entertainment] stockholders are to receive $23.00 in cash for each share of Class A and Class B common stock, for a total transaction value of $5.9 billion, including the assumption of debt and net of cash acquired. The offer price represents a premium of 43.2% over Regal’s 30-day unaffected weighted average share price of $16.06.
The transaction has been approved unanimously by Regal’s and Cineworld’s Boards of Directors. The Anschutz Corporation, which owns approximately 67% of the combined voting power of Regal’s outstanding shares of Class A common and Class B common stock, has signed a voting and support agreement to support the transaction. Global City Holdings B.V. (“GCH”) and the trustee of trusts of which Cineworld’s Chairman, Anthony Bloom, is a potential discretionary beneficiary, collectively owning approximately 28.8% of Cineworld’s ordinary shares, have signed irrevocable undertakings to vote in favor of the transaction and rights offering. The transaction is subject to regulatory review, approval by the shareholders of Regal and Cineworld and other customary closing conditions and is expected to close in the first quarter of 2018.
Regal Entertainment Acquisition: Is it in the best interests of shareholders?
Reportedly, one Wall Street analyst has a $24.75 price target on RGC stock. Regal Entertainment Group shareholders who are concerned about whether the Regal Entertainment Group’s Board of Directors obtained the best price for Regal Entertainment Group common stock shares, conducted an adequate sales process, and acted in the best interests of shareholders in connection with the proposed merger can speak privately with a securities attorney by completing the form on the right or contacting John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected] or send an e-mail to [email protected].
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