Show-Stopper: Failed Cineworld-Cineplex Deal Could Lead to MAC Litigation
BRAD MOORE, BRADLEY FREELAN, & MONTANA LICARI | June 18, 2020 | Fasken
On December 15, 2019, United Kingdom-based Cineworld Group plc (“Cineworld”), the second largest cinema chain worldwide, entered into an arrangement agreement (the “Arrangement Agreement”) with Cineplex Inc. (“Cineplex”) whereby Cineworld would acquire all of the issued and outstanding shares of Cineplex for $34 per share in cash, representing a premium of 42% to the closing price on the Toronto Stock Exchange (“TSX”) and a premium of 39% to the volume weighted average share price on the TSX for the 30 days ending December 13, 2019. The total transaction value was approximately $2.8 billion including the assumption of net debt. The transaction was to proceed by way of a statutory plan of arrangement under the Ontario Business Corporations Act, and was expected to close in the first half of this year. Notably, the Arrangement Agreement contained a definition of Material Adverse Effect that specifically excluded any such change, event, occurrence, effect or circumstance arising out of, relating to, resulting from or attributable to “outbreaks of illness or other acts of God.”