Cineworld will fight ri­val Cine­plex over lawsuit row

The Daily Telegraph - Business - - Business - By Han­nah Ut­t­ley

CINEWORLD has vowed to fight back against a lawsuit launched by Cana­dian ri­val Cine­plex over an aban­doned $1.3bn (£1bn) takeover bid.

The Bri­tish firm is be­ing sued by Cine­plex for al­legedly breach­ing its obli­ga­tions af­ter back­ing out of the deal when the pan­demic hit. Regal owner Cineworld de­nied be­hav­ing wrongly yes­ter­day, adding that if Cine­plex’s claim proves suc­cess­ful, it will be lim­ited to its costs and ex­penses in­curred as part of the deal. Cine­plex is seek­ing C$2.18bn (£1.3bn).

Cineworld aban­doned its takeover ef­fort last month af­ter claim­ing Cine­plex breached a num­ber of agree­ments – which Cine­plex de­nies.

The merger would have cre­ated North Amer­ica’s big­gest cinema op­er­a­tor.

A spokesman for Cineworld said: “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 in­tends to coun­ter­claim against Cine­plex for these damages and losses.”

An­a­lysts at Peel Hunt said they ex­pect the deal to even­tu­ally go ahead, but on re­vised terms given the im­pact of coro­n­avirus on the film in­dus­try.

They said: “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.

“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.”

Cineworld last month se­cured a $250m overdraft from a group of in­vestors as it pre­pares to re­open its cine­mas in the US and UK from July 31.

Cinema chains have been dealt a ham­mer blow from the im­pact of coro­n­avirus which has caused movie the­atres across the world to shut dur­ing lock­down. The in­dus­try is hop­ing that new film re­leases in­clud­ing Mu­lan and

Tenet in July and Au­gust will boost sales at the box of­fice.

Shares in Cineworld closed down more than 4pc at 57.6p last night.

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