Cineworld Backs Away From $2.1 Billion Deal for Canada’s Cineplex

U.K.-based Cineworld Group has backed out of a deal to acquire Canada’s Cineplex Inc. for $2.1 billion, citing breaches in the agreement for the transaction.

Cineworld, parent of the Regal Cinema chain in the U.S., made the announcement Friday, saying it had become aware of certain breaches by Cineplex Inc. along with a “material adverse effect” that had has occurred with respect to Cineplex.

“As a consequence of these matters and Cineplex’s unwillingness to cure the breaches, Cineworld has notified Cineplex that it has terminated the Arrangement Agreement with immediate effect,” Cineplex said. “The Acquisition will therefore not proceed.”

Cineworld also said Cineplex claims that it has not breached the deal terms and that a material adverse effect had not occurred.

“Cineworld has complied with all of its obligations under the Arrangement Agreement and it is entitled to terminate the Arrangement Agreement,” Cineworld said. “It will therefore vigorously defend any allegation to the contrary.”

The Cineplex acquisition agreement was announced in December. Cineplex operates 165 cinemas with 1,695 screens and is the dominant player in the Canadian theatrical market.

Cineworld previously paid $3.6 billion for Regal Entertainment Group. The company said at the time that it planned to combine the operations of Cineplex and Regal to create the largest exhibitor in North America. Following completion, the new Cineworld would have had 11,204 screens globally and a combined 8,906 screens across the U.S. and Canada.