TORONTO — Shares of Cineplex Inc. fell more than 10 per cent after a short-seller suggested the company's $2.8-billion deal to be acquired by Cineworld PLC could fall apart or see the price reduced materially.
In a series of tweets, Hindenburg Research says the stock market is significantly underestimating the chances that Cineworld will seek to break or modify the deal.
Hindenburg, which said it is short Cineplex shares, raised concerns about the debt involved in the deal and said the new coronavirus has put pressure on theatre operators. The release of the James Bond movie "No Time To Die" was pushed back by several months this week due to concerns about COVID-19.
An investor who sells a stock short makes money when the price of a share falls.
Cineplex shareholders voted last month to approve Cineworld's offer of $34 per share in cash. The deal is still subject to other conditions including Investment Canada Act approval.
Shares in Cineplex were down $4.03 at $28.45 in trading on the Toronto Stock Exchange.
This report by The Canadian Press was first published March 5, 2020.
Companies in this story: (TSX:CGX)
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