Regal Entertainment Group (NYSE: RGC)

For the majority of Americans, you can pretty much bet that they have been in a building that is owned and operated by Regal Entertainment Group. You see, this is one of the largest cinema production companies in the world and in the US. They operate movie theaters in 42 states in the United States under various names.

Some common ones are Regal, United Artist, and Hollywood theaters. So when shares were halted during the regular trading session on Tuesday, November 28th, speculation ran rampant that they were about to be acquired. Shares shot up when the rumors abounded, then got halted, then reopened again before closing at 4 p.m. with speculation still circulating.

However, in the in the after hours, the rumors were confirmed and the shares traded higher once again when Regal confirmed they had been approached with a $3.6 billion cash offer for their shares from a British movie theater operator. This equates to somewhere near $23.00 per share.  

Shares which were very volatile once speculation started to abound, traded up in the regular trading session +$1.38 closing at $19.63 which was up 7.56%. However in the after-market session, once the rumors were confirmed, shares shot higher and closed at $20.80 up an additional 5.96%.

Now you may ask, if they are being bought at $23 per share why did they not close at $23 per share in the after-hours. And that’s a very good question. The answer to that is what’s called Arbitrage. Simply stated, the difference between the $23 share buyout and the $20.80 close in the aftermarket indicates that until the final deal closes there is some chance, even though it may be a small one, that the deal may not go through.

It is because of that that arbitrageurs get involved and the price will not trade at $23 until closing the deal. There is one caveat, however, if the company receives a competing buyout offer or there is speculation of one, shares can actually trade higher than the $23 current offer from Cineworld.

The last major deal in the sector was in December 2016, when AMC completed its acquisition of Carmike Cinemas for about $1.1 billion. AMC also acquired Europe’s largest theatre chain, Odeon, for $1.2 billion last year.

Regal Charity

The Regal Foundation was organized in 2003 by Regal Entertainment Group in order to engage in charitable activities directly and by providing funds to other organizations, golf tournaments, and the University of Tennessee.

The Regal Foundation holds a large in-theater donation drive during the summer months of the year known as “Stars of Hope”. During this event, patrons can donate $1 to the Regal Foundation. The names of donors are written on individual stars and posted on a “wall of fame” visible in that patron’s respective theater.-Wikipedia

Regal Entertainment Chart

Nothing would indicate in the chart going back 6 months on The Daily time frame that anything has been stirring regarding a buyout. However, over the last 2 days before today price action did show a slight jump in share price -closing above some previous daily price resistance.