FILE PHOTO: A Cineplex movie theatre sign looms over Yonge street in Toronto, Ontario, Canada March 16, 2020. REUTERS/Chris Helgren/File Photo
July 6, 2020
By Tanishaa Nadkar
(Reuters) – Cineworld said on Monday it planned to make a counter-claim against Cineplex following the Canadian cinema chain’s legal action against the British group for damages after it scrapped a $1.65 billion takeover.
Cineplex said last week it was suing Cineworld for damages, including about C$2.18 billion that Cineworld would have paid on closing of the deal.
The British company abandoned the takeover last month, citing what it termed the Canadian company’s breaches in the merger agreement.
Cineworld said on Monday it did not breach any obligations or duties and said if Cineplex’s claim was successful, it would be limited to its costs and expenses incurred as part of the deal.
“Cineworld is entitled to recover from Cineplex all damages and losses that it has suffered as a result of Cineplex’s breaches and the acquisition not proceeding,” Cineworld said in a statement. “Cineworld intends to counter-claim against Cineplex for these damages and losses.”
Cineplex has denied these claims.
Shares in the British company were down 3.7% at 57.9 pence by 1255 GMT.
The deal was announced in December and would have made the British company North America’s biggest cinema operator.
“We expect the legal actions to take some time, but in the end, once the relative strength of each side’s legal position has been tested, we expect Cineworld to acquire Cineplex on revised terms,” Peel Hunt analysts said.
“Cineplex appeared unable to find another buyer prepared to make a superior offer when it had the chance to, pre-Covid-19, and seems unlikely to do so now,” the Peel Hunt analysts said.
Cineworld said last month it had secured a $250 million debt facility from a group of investors as it was gearing up to reopen theatres following the easing of coronavirus-led lockdowns globally.
The Regal cinema owner operates about 9,500 screens globally, with more than 7,000 in the United States.
(Reporting by Tanishaa Nadkar in Bengaluru; Editing by Sriraj Kalluvila and Jane Merriman)