Weeks after Cineworld (GB:CINE) filed for bankruptcy in the U.S., its Canadian competitor Cineplex (TSE:CGX) has approached the cinema chain for a merger deal.
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Cineplex is considering striking a deal to merge with Cineworld’s U.S. division, Regal Entertainment.
The Canadian company is in the early rounds of discussion with Cineworld’s lenders about supporting the deal. Cineplex offered to acquire Regal in a debt and stock deal supported by the new combined entity.
Previously, Cineworld had announced it would buy Cineplex in 2019, which was later scrapped on account of breaches in the agreement. This led to Cineplex filing a lawsuit and winning it, along with damages worth $965 million.
Since then, Cineworld has been struggling with a debt pile and pandemic recovery and recently filed for Chapter 11 bankruptcy. Cineworld’s bankruptcy has protected the company from paying any fines so far.
The shares of Cineworld gained some momentum before taking a U-turn. Overall, the stock has been crashing and has lost almost 96% of its value in the last year.
Cineplex’s shares jumped by 6% after the news.
Conclusion
There is no official announcement from either of the companies on this matter.
Cineworld is hoping to emerge from bankruptcy in 2023. If Cineworld’s lenders come out in the majority, they can take control of the company or even approve the potential merger.
