bb talk about CP acquisition16 Dec 2021 20:57
I’ve seen a lot of talk about this on here tonight, so thought I’d give my own input.
There are two main possibilities that I’ve seen discussed here today:
1. An outright acquisition of Cineplex at the value of the ruling ($1.3bn)
2. A hostile takeover of Cineplex, which would in turn mean we could wipe off the ruling and it would disappear, plus we’d own Cineplex in the process.
So here’s my opinion of each one:
1. I don’t see this happening. There is extremely bad blood between CP and CW, and CP knows that to allow CW to acquire would mean they are helping us out. I don’t think they’d like to do that lol. They can get a large chunk of money if they reject the acquisition and get the amount from the ruling as it stands. However you never know, perhaps they’d allow it and be happy to get their shareholders a large premium (right now it would be about 90-100% premium).
On the other hand…
Option 2. I can see this perhaps happening, although it’s a risky move. For those that don’t know, a hostile takeover is when someone buys a large amount of shares (usually up to 50% ownership + 1 share) to obtain majority controlling interest over the company and it’s votes. Cineworld could do this, but you also need to consider what would happen to CP’s share price. If CW seeks out to acquire 50% of all CP shares, that alone will cause a large increase in the CP share price. What stops CP from saying ‘lovely rise in the sp, let’s do a rights issue now’. The plan for a hostile takeover would then fall to pieces, as the stock would be diluted, and CW would need to acquire EVEN MORE CP shares to achieve 50%. It could be a downward spiral if it doesn’t go perfectly.
Even if CW manage to get that 50%, many companies have a special protocol called a ‘poison pill’ which allows for an emergency share issuance of some sort IIRC to prevent a hostile takeover from occurring. So the plan for a hostile takeover is a very complex one. If CW manage to get through all of the hurdles then it is fantastic, but a very risky move indeed.
To be very honest, £700m is not awfully bad. Like I said yesterday it is financially equivalent to 2-3 months of 2020 lockdown. So even in the worst case scenario of the ruling standing as it is, I think we will be ok. It is a drop in the bucket relative to the £10.2bn in debt we have already. Rights Issue just isn’t possible at this price, Mooky’s family fortune would be largely wiped clear due to the dilution. I feel there is a clear path out of all of this if we get the worst case. I’m not very concerned. I bought a few more shares today too.
So yes, those are my opinions on all the options for acquiring CP :)
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