Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Thursday, March 28, 2024 | Back issues
Courthouse News Service Courthouse News Service

Shareholders Sue to Stop Movie Theater Merger

Shareholders filed a class action to halt the $5.9 billion acquisition of Regal Entertainment Group by fellow cinema operator Cineworld Group PLC, claiming the deal is undervalued and unfair.

(CN) - Shareholders filed a class action to halt the $5.9 billion acquisition of Regal Entertainment Group by fellow cinema operator Cineworld Group PLC, claiming the deal is undervalued and unfair.

The suit was filed in Fort Knox Chancery Court on behalf of Regal stockholders. Regal is based in Knoxville, Tennessee, and operates 561 theaters in 43 U.S. states and other U.S. territories.

The acquisition was announced on Dec. 5, 2017, where Britain-based Cineworld will pay $23 per share for Regal. The lawsuit, however, alleges that Regal's majority shareholder Anschutz Corp. has already pledged its shares in support so that no minority investor vote is needed to consummate the deal. The lawsuit alleges that the deal was "designed with only Cineworld in mind with no real market check being done by the company or the board until after the merger agreement was executed."

Regal's senior management allegedly entered into the deal to secure "significant and immediate benefits while the company's shareholders are cashed out an unfair price."

Other potential buyers were allegedly precluded from the bidding process with protection devices, which stipulate a $100 million fee payable to Cineworld if the Regal found a better offer. Investors also claim Regal filed statements with the SEC that omitted important information about the transaction, information they say they need to make an informed decision of whether they should seek an appraisal of their shares in lieu of the $23 offer from Cineworld.

Regal's stock has shown and continues to show solid performance, the suit says, but Regal's officers have entered into a deal that deprives investors of reaping the full benefits.

The lawsuit seeks to stop the transaction until Regal implements a procedure, such as an auction, to find the highest bidder. Investors are represented by Paul Kent Bramlett and Robert Preston Bramlett in Nashville. Of counsel: Evan J. Smith and Marc L. Ackerman of Brodsky & Smith LLC in Bala Cynwyd, Pa.

Categories / Business, Entertainment, Financial, National, Securities

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Loading...