Cineworld Backs Out of $2.8 Billion Deal to Take Over Cineplex
The Canadian movie theatre chain has denied all allegations against it and now vowing to take the U.K. company to court
Published Jun 12, 2020International theatre chain Cineworld is scraping its $2.8 billion takeover deal to buy out Canada's Cineplex.
The U.K.-based theatre giant made the announcement Friday (June 12), claiming "certain breaches" of the contract were made by the national Canadian movie theatre company.
However, Cineplex has stated Cineworld's allegations are false, and it is now vowing to take the U.K. company to court over the damages.
Of course, the announcement comes in the midst of the global COVID-19 pandemic, which has effectively shut down the movie industry. Like most threatres throughout the world, Cineplex has kept its 165 theatres across Canada closed since March. And while some small theatres are now reopening in some parts in Canada, there is still no sign of when Cineplex may be back to somewhat normal operations.
While details are a bit unclear, Cineworld claims it became aware of contract-breaking material and various breaches on the part of Toronto-based Cineplex. This has now led the international chain to back out of the deal as a June 30 deadline loomed. When contacted by the CBC, however, Cineworld would not go into details.
Cineplex, on the other hand, said it complied with its obligations and will "vigorously defend any allegation to the contrary," and seek damages in court.
"Cineplex believes that Cineworld's allegations represent buyer's remorse, and are an attempt by Cineworld to avoid its obligations under the [agreement] in light of the COVID-19 pandemic," the company said. "Cineplex intends to commence legal proceedings promptly against Cineworld and seek damages."
Cineworld struck deal to buy out Cineplex late last year — long before COVID-19. The deal found it buying Cineplex for $34 per share, a 42 percent premium on the chain's stock price at the time.
What this all means for Tanner Zipchen is so far unclear.