....but a flippin'big un .i don't want to double my holding so i will take up partial rights but we have a couple of weeks to think about it so i'll leave it till i have to pay or walk away . what we can't know is wether Regal is cheap /fair /expensive but the balance of probability is it will be ok .
You are correct to assess it on the basis of whether or not the company can make a success of the acquisition, because the rights themselves don't really give much in the way of a preferencial deal to existing holders.
Perhaps one thing to consider is how the US profits will be affected by the future exchange rate. The Fed seem to be on a mission to devalue the USD, and the UKP might strengthen once the Brexit uncertainty is out of the way, which would reduce the US profits when declared in sterling.
Also, UK companies have a fairly dismal track record when it comes to moving into the US. Is CINE up to it?
Decision time is near as to whether to hold and subscribe, sell all, partially sell etc. What I have failed to spot anywhere, is an objective assessment of the benefits of the deal and/or why the sp fell so sharply if it is such an attractive proposition. Questor has just repeated its buy recommendation but without explaining why.. I think it comes down to an absolute bet on the ability or otherwise of the management/effective owners to make it work and that it is not simply the lure of Hollywood influence that has led plenty of others on to the rocks. The legal and underwriting costs all by themselves will be huge and it will be at least two years before the "exceptional items" are out of the way and we will know where we are. Of course, investing is all about risk and reward. In horse racing, it often pays to back a previous course and distance winner and on that flimsy basis alone, I have decided to take up the rights!
My recollection is if you don't take up your rights (and instead receive payment for them) it's treated as a disposal and the acquisition date for the rights is conisdered to be the date you purchased the qualifying shares.
corr ! that's a lot of brass we're raising ....not sure I want to double my investment here....we're being asked to take on some faith here .will leave my decision 'till the last but most likely i'll take up some rights and sell the rest to maintain my position .quick glance over trading update looks good .
Cineworld would become quite a different animal following the takeover being very higly indebted and maybe more of a dividend play than before. But it will be no2 in the world of cinema, with a very wide geographical coverage.
What value a cinema chain with widespread coverage could be to be to a third party? Would other folks who produce content be interested in controlling its distribution? Could there be a takeover bid from "above" before the takeover becomes into effect (or shortly after?)
"Plans on the part of FTSE 250 leisure group Cineworld to acquire Americas second largest cinema chain, Regal Entertainment, have hit the shares hard, as the deal is likely to be funded in part by a rights issue. This leaves us sitting on a book loss of just over 20% and with a tricky decision to make. However, Cineworlds solid record of generating organic and acquisitive growth suggests that investors should be patient and stick with the stock. Its last sizeable acquisition was Cinema City International in 2014, which took Cineworld into Eastern Europe and Israel.
The shares fell by more than a quarter as investors digested the £110 million rights issue that funded that deal but anyone who got involved did well as the shares subsequently soared. A weak summer slate for film releases has weighed on Regals share price and Cineworld may have spotted a chance to bag a bargain. Questor says Hold." ~ 545p
now a hold (from add ) price target £6 (from £7.25 ). we are in a risk business as private investors and CINE need to be bigger to compete with our Chinese friends so i'm holding for now but with a big big rights issue on the way we can't expect much in the way of recovery for some time .i
Whilst agreeing totally with the hubris element of the bid, having seen the effect of the siren voices of Hollywood lure many on to their financial rocks in the past, I remain curious as to why highly intelligent and successful entrepreneurs could be entering into such a seemingly stupid act.
The Lex section of to-day's FT illustrates the unattractiveness of the industry in the USA, so, why the bid? We have to consider also why there are potential bids from the Odeon group and the amount of Asian interest in potential cinema group acquisitions?
I have been a Cineworld shareholder for some time and I remember my dismay when Global City Holdings, in effect took over the then successful, but small Cineworld, and injected their East European Assets into the business. I nearly sold out then but later much relieved that I did not. The Regal bid is similar but much bigger, of course. There must be reasons of which we are unaware. The Regal business is uninspiring and with falling cinema attendances.
Maybe it is just hubris after all, but I am going to hold for the time being and hope more info emerges.
i can't remember such a bad reaction to this proposed bid .just terrible .either the board sells the bid and its benefits to shareholders or this proposal will fail along with all our creditability .bad as it is today in all probability it's oversold because we have a damned good business here .the thing is the massive part of the business is owned by the the board .mooky and israel greidinger 76 m each....what are they thinking of ???
I've been thinking the same......where's the gain ?? as you point out there's so many ways to access new films CINE need to do some explaining why we need to take this sort of risk. nearly 15% off as I write is a big fat raspberry from the market to this news .i'm holding for now (wish i'd sold yesterday) only because the greidnger's are really smart operators with a hell of a lot of their pile involved in this .
This is not good news, certainly in the short term. A" material" rights issue is going to require more cash to maintain position but worse is a high execution risk, huge expenses on fees of all sorts and added currency exposure. With the US addicted to Netflix and its ilk, hard to see any growth and, as far as I know, CINE management has no US experience. Anyone see any upside???
Cineworld confirms possible offer for Regal
By StockMarketWire | Wed, 29th November 2017 - 08:03
Cineworld has confirmed it was in advanced discussions with Regal, the second largest cinema chain in the US, and was finalising due diligence in relation to a possible all-cash offer at a price of $23.00 per share.
Cineworld said it was currently intended that it would fund the potential acquisition of Regal through a mixture of incremental debt and a material equity raise by way of a rights issue, including a commitment to full subscription from Cineworld's 28% shareholder, Global City Holdings NV.
It said the proposed financing of the potential transaction would allow the enlarged group to continue its current strategy of investment in the business, as well as to maintain its policy of progressive dividends. Cineworld said it would only proceed with the potential transaction in circumstances and on terms which it believed would be accretive to shareholder value.
At 8:03am: (LON:CINE) Cineworld Group PLC share price was -60p at 634.5p
Well a whiff of takover in the market and similar shares may react upwards. A reduction in the number of players in the market reduces competition long term and also perhaps puts other sector shares in play also.
according to Sharecast, Vue is considering a £3b merger with Odean....tough competition for CINE if that was to occur.also,Peel Hunt whilst still saying buy have reduced their target price from £7.75 to £7.25
I had misgivings when Cineworld was taken over, in effect, a few years back, but held and very happy that I did so. The growth and profitability is impressive and with the continued momentum I think they still remain a buy.
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