Image source: Getty Images
He Cinemundo (LSE: CINE) shares rose 40% around midday on Monday as talk of a takeover bid emerged, before pulling back. At the time of writing, Cineworld shares are up 20% on the day.
According sky news, Vue International is analyzing an offer. The privately owned cinema operator has also apparently secured financial backers. He Darling report talks about funds managed by Barings and Farallon Capital Management.
In early January, Cineworld announced that “has been in discussions with its key stakeholders to develop a proposed Chapter 11 reorganization plan that seeks to maximize value for the benefit of moviegoers and all other stakeholders.”
Search for buyers
The update added that “The company will also carry out a marketing process in search of a transaction that maximizes the value of the group’s assets, focused on proposals for the group as a whole.“
At that time, rumors arose that AMC Entertainment he was interested in buying some of Cineworld’s film assets. But the company denied it. This seemed to have ruled out any piecemeal downloading.
In light of that, Vue’s discussed acquisition approach is presumably company-wide. So what is likely to happen? And is Cineworld stock a good speculative buy now?
Clean
As it was, things were looking dire for shareholders. The market capitalization had fallen to just £60m. And that’s with the balance sheet having net debt of $8.8 billion as of June 30, 2022. Creditors take precedence in any bankruptcy, with shareholders at the bottom of the hierarchy. Therefore, any bailout deal would surely kill off the interests of existing shareholders.
After the January proposal to find buyers for the company, I expect some investors have put some money on the line. They would expect to make a short-term profit on any subsequent acquisitions. Now that a focus has emerged, does it make sense to buy?
On the downside, I fear there could be little gain to outweigh the risk. Typically, a suitor needs to make an offer attractive enough for shareholders and the board to approve. But these are far from normal circumstances.
Options
What options do Cineworld shareholders have right now? “No, you’ll have to raise your offer if you want to take on your billion-dollar debt.“? That doesn’t sound like a strong bargaining position. Not when the alternative could be a forced asset liquidation that leaves them with nothing.
On the other hand, who else could be waiting to see the size of any Vue International offering? And who could try to beat him? I think a bidding war looks like the best possible outcome for shareholders at this point.
Buying today would really just be a gamble. And that’s enough to keep me away. But I hope that Cineworld shareholders are close to getting something out. I was afraid they would get nothing.
var config = {
apiKey: ‘1ed121d592e04642d57912bb369ef696621661a3’,
product: ‘PRO_MULTISITE’,
logConsent: false,
notifyOnce: false,
initialState: ‘NOTIFY’,
position: ‘LEFT’,
theme: ‘DARK’,
layout: ‘SLIDEOUT’,
toggleType: ‘slider’,
iabCMP: false,
closeStyle: ‘button’,
consentCookieExpiry: 90,
subDomains : true,
rejectButton: false,
settingsStyle : ‘button’,
encodeCookie : false,
accessibility: {
accessKey: ‘C’,
highlightFocus: false },
onLoad: function () { // hide Cookie Control recommended settings button.
var recommendedSettingsButton = document.getElementById(‘ccc-recommended-settings’);
if (recommendedSettingsButton) {
recommendedSettingsButton.classList.add(‘hide’);
} },
text: {
title: ‘Privacy Notice’,
intro: ‘This site uses cookies, pixels, and other similar technologies to improve your web site experience and to deliver you personalised ads about our own and third party products and services. Please read more about how we collect and use data about you in this way in our Cookies Statement in our Privacy Policy. You can change your cookie settings in your browser at any time. ‘,
necessaryTitle: ”,
necessaryDescription: ”,
thirdPartyTitle: ‘Warning: Some cookies require your attention’,
thirdPartyDescription: ‘Consent for the following cookies could not be automatically revoked. Please follow the link(s) below to opt out manually.’,
on: ‘On’,
off: ‘Off’,
accept: ‘Accept’,
settings: ‘Cookie Preferences’,
acceptRecommended: ‘Accept Recommended Settings’,
notifyTitle: ‘Privacy Notice’,
notifyDescription: ‘This site uses cookies, pixels, and other similar technologies to improve your web site experience and to deliver you personalised ads about our own and third party products and services. Please read more about how we collect and use data about you in this way in our Cookies Statement in our Privacy Policy. You can change your cookie settings in your browser at any time. ‘,
closeLabel: ‘Save Preferences and Close’,
accessibilityAlert: ‘This site uses cookies to store information. Press accesskey C to learn more about your options.’,
rejectSettings: ‘Reject All’,
reject: ‘Reject’,
},
branding: {
fontColor: ‘#fff’,
fontFamily: ‘Arial,sans-serif’,
fontSizeTitle: ‘1.2em’,
fontSizeHeaders: ‘1em’,
fontSize: ‘1em’,
backgroundColor: ‘#313147’,
toggleText: ‘#fff’,
toggleColor: ‘#2f2f5f’,
toggleBackground: ‘#111125’,
alertText: ‘#fff’,
alertBackground: ‘#111125’,
acceptText: ‘#ffffff’,
acceptBackground: ‘#111125′,
buttonIcon: null,
buttonIconWidth: ’64px’,
buttonIconHeight: ’64px’,
removeIcon: false,
removeAbout: false },
necessaryCookies: ( ‘wordpress_*’,’wordpress_logged_in_*’,’CookieControl’,’PHPSESSID’,’fivc’,’fivs’,’fivp’,’Ookie’,’Fool_subinfo’,’_gads’,’_gid’,’_gat’,’_ga’,’__utma’ ),
optionalCookies: (
{
name: ‘Sharing’,
label: ‘I would like content tailored to my personal preferences.’,
description: ‘We work with advertising partners to show you ads of products and services you may be interested in. You can choose whether or not to have ads delivered in a personalised way by setting this option. You can return to review this setting at any time by clicking the "C" logo in the bottom left corner of any page.’,
cookies: ( ‘_ga’, ‘_gid’, ‘_gat’, ‘__utma’, ‘_gads’ ),
onAccept: function () {
// Add Facebook Pixel
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=();t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)(0);
s.parentNode.insertBefore(t,s)}(window,document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘901682110316659’);
fbq(‘track’, ‘PageView’);
fbq(‘consent’, ‘grant’);
// End Facebook Pixel
// Enable Google ad personalization
// gtag (‘set’, ‘allow_ad_personalization_signals’, true ) ;
},
onRevoke: function () {
fbq(‘consent’, ‘revoke’);
// Enable Google ad personalization
// gtag (‘set’, ‘allow_ad_personalization_signals’, false ) ;
},
recommendedState: ‘on’,
lawfulBasis: ‘consent’,
},
),
statement: {
description: ”,
name: ”,
url: ‘https://www.fool.co.uk/help/privacy-and-cookie-statement/’,
updated: ”
},
};
CookieControl.load(config);
