Last year we first reported upon the court battle between Cineworld and Canadian theatre giant Cineplex. Cineworld had agreed to a takeover deal of the Canadian giant to increase their own North American market share. However, in light of the pandemic, they pulled out in June 2020.
A month after pulling out Cineplex sued for damages and Cineworld countered back. However just yesterday the Canadian Court found that Cineworld had ‘repudiated’ its own transaction and was ordered to pay a breach of contract of $1.24 billion dollars.
There are 30 days during which the decision can be appealed. The FTSE 250 worldwide giant stated, they would be appealing the decision but that didn’t matter to shareholders who saw a 30% hit on share price after the news hit the stock market.
Cineworld reports a $3 billion loss in March 2020
Read more: Cineworld Is Being Taken To Court By Cineplex
After seeing a $3 billion loss this past march, along with difficulties following the pandemic and an ongoing debt pile, a further billion owed from pulling out of a takeover deal could be devastating, Even rival CEO, Adam Aaron of AMC Theatres in the US released a tweet after the news almost mocking his competition.
A Canadian court just ruled that Regal/Cineworld, our largest competitor in the U.S./Europe, must pay nearly $1 billion USD in damages over the failed Cineplex merger. Will be appealed, but anything distracting or destabilizing our biggest competitor brings opportunity to AMC.
Whether or not the decision will be successfully appealed is unknown at this stage. Cineworld had already taken on a lot of debt in their previous acquisition of Regal Cinemas in the US just years before their now-cancelled takeover of Cineplex.
A further sale of assets if the appeal fails isn’t out of the question, and as we saw last year with bidders such as Amazon awaiting in the wings, we could see the breakup of Cineworld as we currently know it…
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