After a bungled acquisition transaction in which Cineworld was set to purchase Cineplex, Cineplex announced today that it had won its case against Cineworld group.
Cineplex has been granted CAD$1.24 billion (US$965 million) in damages for breach of contract, according to the judgment from the Ontario Superior Court of Justice.
After Cineworld Group withdrew from a deal to buy Cineplex in June 2020, the first lawsuit was filed in July 2020.
Cineworld, the world’s second-largest exhibitor and owner of Regal in the United States, announced in December 2019 that it will buy Cineplex for CAD$2.18 billion (US$1.6 billion), and a contract was signed. By the number of screens it has, the transaction would have made Cineworld the largest exhibitor in North America.
Then, in June 2020, Cineworld experienced “buyers remorse,” as its cinemas were forced to close for months, if not years, due to the COVID-19 pandemic. Cineworld subsequently chose to back out of the arrangement because it had no idea when the cinemas would reopen and was losing millions of dollars as a result of the closure of its operations.
Cineworld announced that it was canceling the transaction because Cineplex had violated the terms of the agreement and had suffered a “substantial adverse consequence.” Because of the epidemic, the company’s screens had to be turned off.
Cineplex’s complaint at the time claimed that Cineworld had opted to cancel the arrangement because of the COVID-19 pandemic’s unexpected repercussions. However, under the terms of the contract, neither party could back out due to illness outbreaks, which the pandemic was very much a part of.
Cineplex sought damages of CAD$2.1 billion (US$1.6 billion) in the first lawsuit. The sum was presented to the court. Cineworld refuted the charges and chose to file a counter-claim for losses and damages.
Cineworld indicated in a statement in July 2020 that they would strongly oppose the claim, and that if Cineplex won the lawsuit, they would only be able to receive a modest sum, not the full amount for the transaction.
“We are happy that the Court concluded Cineplex acted lawfully throughout this challenging moment in our history,” said Cineplex CEO Ellis Jacob in a statement about the lawsuit.