Jun 15, 2020

Cineworld faces legal action for pulling out of Cineplex deal

Cineworld, the world's second-largest cinema chain, is facing the threat of costly legal proceedings after its Canadian rival Cineplex launched action against it for pulling out of a $2.3bn deal that was due to complete this month. Cineworld had agreed to pay C$34 per share for Cineplex in December with the deal due to be completed at the end of June, subject to Canadian competition authority approval. "The deal looked like it made a lot of sense. It looked like quite a decent business . . . But we are in a very different world now. From an operational point of view, Cineworld have enough to do with their own estate at the moment without trying to take on another chain as well," said Richard Marwood, a senior fund manager at Royal London Asset Management, which holds a 2.5 per cent stake in Cineworld. Cineworld announced it was pulling out of the Cineplex acquisition after market close on Friday, just days before the Canadian competition authority was due to rule on the deal. Natasha Brilliant, an analyst at Citigroup, argued that Cineworld should have waited until either the Canadian watchdog blocked the deal or Cineplex publicly breached its debt obligations.

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