Cinema seatsShow's Over: Cineworld Pulls Multi-Billion Cineplex Acquisition
The deal collapse is the latest in a series of terminations due to COVID-19.
June 16, 2020 at 05:05 AM
3 minute read
Cinema chain Cineworld has abandoned its C$2.8 billion ($2 billion) acquisition of Canadian rival Cineplex in the latest collapsed deal to emerge amid the pandemic.
In a statement on Friday, UK-listed Cineworld said the decision follows "certain breaches by Cineplex" and Cineplex's "unwillingness to cure the breaches".
But Cineplex has refuted those claims, adding that the decision to pull out of the acquisition indicates "buyer's remorse" in light of the COVID-19 pandemic. Cineworld said it will pursue damages.
Cineplex said in a statement: "Cineplex believes that Cineworld has no legal basis to terminate the arrangement agreement and that Cineworld has breached its contractual obligations.
"Cineplex intends to commence legal proceedings promptly against Cineworld and seek damages for Cineworld's breaches of the arrangement agreement and failure to discharge its obligations thereunder."
The proposed acquisition was announced in December last year. Herbert Smith Freehills and Baker McKenzie were advising Cineplex on the deal, while Slaughter and May stepped up for long-term client Cineworld.
The situation bears similarities to Sycamore Partners' decision to abandon its majority stake acquisition of U.K. lingerie brand Victoria Secrets, citing COVID-19 as a reason. The seller issued proceedings and the parties reached an agreement terminating the deal in May.
Other deals have also been abandoned. America's largest shopping centre owner Simon Property Group is abandoning its $3.6 billion deal to buy U.S rival Taubman Centers. Simon Property Group announced on June 10 that it is terminating the deal which was agreed in February this year. In a statement, the company cited the "uniquely material and disproportionate effect" of COVID-19 on the business.
Meanwhile, LVMH is exploring the impact of coronavirus on its acquisition of Tiffany & Co. It said in a statement that both parties are focusing "attention on the development of the pandemic and its potential impact on the results and perspectives of Tiffany & Co with respect to the agreement that links the two groups".
|Read More:
Slaughters and HSF Take Seats For Cineworld's $2.8B Acquisition
Yet Another Consequence of COVID-19: Deal Termination Disputes
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