The Globe and Mail reports in its Monday edition that Cineworld Group's planned $2.8-billion Cineplex takeover looks doubtful.
The Globe's Andrew Willis writes that Cineplex agreed to a friendly $34-a-share takeover offer in December. After trading near the takeover price for several months, Cineplex stock closed on Friday at $20.41.
The massive gap between what Cineworld is offering and where Cineplex is trading reflects growing concerns over whether the deal gets done. The issues are being broadcast by investors such as Hindenburg Research, which is betting that the takeover fails or is at least reworked.
In early March, after release of the latest James Bond film was postponed, New York-based Hindenburg said Cineplex's stock was "horrendously mis-priced," largely because of doubts about the significant loans needed to finance the transaction.
In a series of posts on Twitter, Hindenburg said: "The market significantly [is] underestimating the desperation with which we think Cineworld will seek to break or modify the deal." Hindenburg predicted Cineplex's stock price would drop to $15 if the takeover fails.
Officially, Cineworld and Cineplex say they remain committed to tying the knot, on the agreed terms.
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