Cineworld's courtship of Regal Entertainment Group (RGC 22.37, +1.62, +7.8%) has produced a marriage proposal today and Regal Entertainment Group said yes.
The two companies will soon be tying the knot in a transaction that has a total value of $5.9 billion, including the assumption of debt and net of cash acquired. Under the terms of the proposal, RGC shareholders will receive $23.00 per share in cash for each share of Class A and Class B common stock.
The offer represents a premium of 11% over Monday's closing price, but a 43.2% premium over RGC's 30-day unaffected weighted average share price of $16.06.
Basically, Cineworld saved the day -- and year -- for RGC's stock, which was down as much as 32% for the year in August. When it was confirmed last month that the two companies were holding merger discussions, RGC got a major boost that helped it recoup basically all that had been lost in 2017.
This year, then, is promising to end on an upbeat note for RGC shareholders -- and it could get even brighter if RGC were to attract a rival bid, which it has been given the right to solicit as part of a "go-shop" provision in the deal that expires January 22, 2018.
RGC is trading slightly below Cineworld's cash offer price, which implies investors are not of the opinion that another company with a higher bid will emerge. That could change of course, yet that is the message of the market at the moment.
Anschutz Corporation, which owns approximately 67% of the combined voting power of Regal's outstanding stock, has signed a voting and support agreement to support the transaction, according to the press release.
Pending the proper approvals, and assuming another bidder doesn't emerge, Cineworld's acquisition of Regal Entertainment Group is expected to close in the first quarter of 2018.