Please ensure Javascript is enabled for purposes of website accessibility

Why Regal Entertainment Group Shares Rose 24% in November

By Anders Bylund - Updated Dec 11, 2017 at 3:38PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Early rumors of a buyout bid helped the troubled cinema chain's shares bounce out of their trough.

What happened

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

So what

Near the end of November, the movie theater chain started to hammer out the details of a deal under which it would be acquired by British peer Cineworld. Mere rumors of the deal were enough to drive Regal's share prices 10% higher, and they took another 6% boost when the company confirmed it. Cineworld presented a $5.9 billion buyout offer in early December, triggering a final 9.2% jump in Regal's market value.

A movie theater, packed with happy viewers.

Image source: Getty Images.

Now what

The acquisition has been approved by the boards of both companies, and the privately held Anschutz Corp. already signed a statement in support of this transaction. Anschutz controls 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 get approval from regulators.

That being said, there's no real reason to expect Cineworld's bid will 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 ambitions.

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 broader market over the last one, three, and five years.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.