Cineplex Wins CA$1.2 Billion Judgment in Busted Cineworld Sale
Cineplex has won a CA$1.2 billion judgment against Cineworld, the owner of Regal Cinemas in the U.S., over an acquisition deal that collapsed at the height of the pandemic last year.
Cineworld is based in London and is the world’s second largest theater chain after AMC. In December 2019, the company agreed to acquire Cineplex, based in Toronto, for CA$2.8 billion.
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But just a couple months after the deal was announced, the COVID-19 pandemic decimated the global theater industry. In June 2020, Cineworld announced that the purchase was off, citing “certain breaches” of the contract. Cineplex sued for CA$2.2 billion.
Cineplex is Canada’s largest circuit, with 164 locations, and the fourth largest chain in North America, after AMC, Regal and Cinemark, according to the National Association of Theatre Owners.
After a trial, the Ontario Superior Court of Justice rendered its judgment on Tuesday, ruling in favor of Cineplex and awarding CA$1.24 billion in damages.
“We are pleased that the Court found Cineplex acted properly throughout this difficult period in our history,” said Cineplex CEO Ellis Jacob in a statement. “With roots that go back over 100 years, we are proud of the relationships we have maintained through this process and remain steadfastly committed to our guests, shareholders and team across Canada and the United States.”
In a statement, Cineworld said it planned to appeal. “Cineworld disagrees with this judgment and will appeal the decision,” the company said. “Cineworld does not expect damages to be payable whilst any appeal is ongoing.”
According to the Canadian Press, Cineworld argued that Cineplex had strayed from its “ordinary course” of business during the pandemic by shuttering theaters and deferring rent payments. But Cineplex argued that its actions were consistent with the “ordinary course” for the theater business at the time, and that it had fulfilled its other obligations under the acquisition agreement.
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