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Prices for shares of Cineplex, the Canadian movie-theatre operator, fell more than 30 per cent during a Toronto Stock Exchange session in which the shares were halted twice.

CHRIS HELGREN/Reuters

Cineplex Inc. and Cineworld Group PLC stock tumbled on Tuesday as the companies’ $2.8-billion merger deal got caught up in worry over whether acquisitions in all sectors can be completed as markets gyrate due to the global coronavirus pandemic.

Prices for shares of Cineplex, the Canadian movie-theatre operator, fell more than 30 per cent during a Toronto Stock Exchange session in which the shares were halted twice. They then clawed back to settle down 3.5 per cent at $9. In London, Cineworld, which offered to acquire Cineplex for $34 a share in December, sank 43 per cent.

The deal is one of many that investors worry could be in trouble in the market turmoil as the impact of COVID-19 grows. This week, GMP Capital Inc. postponed a meeting that was key to its proposal to gain full ownership of its wealth-management business, Richardson GMP Ltd., blaming the market volatility.

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Last week, Brookfield Asset Management Inc. put the sale of its Dalrymple Bay Coal Terminal in Australia, said to be worth about US$1.3-billion, on hold due to travel restrictions amid the spread of coronavirus, Reuters reported. Due diligence and site visits required to continue a sale process would be too difficult, the news agency said, quoting sources.

Cineplex said on Monday it is closing all 165 of its cinemas until at least April 2. Cineworld followed suit with its theatres in the U.K. and Ireland on Tuesday. A key question is the health of the companies as revenue is squelched.

“The market is pricing in that it’s a totally dead deal at this point,” said Julian Klymochko, chief executive officer of Accelerate Financial Technology Inc. Cineworld has been a consolidator in the industry, and now investors must wager on just how committed it is to sticking with that role, he said.

“If that’s the case, there’s potential for it closing on the terms, or even repricing,” Mr. Klymochko said.

One potential deal-breaker is a condition in the agreement that Cineplex must prevent its debt from rising above $725-million. The company said on Monday it is cutting expenses to offset the impact on revenue and keep it in line with the condition. But it warned that declining attendance and prolonged government-imposed shutdowns could make that, and other conditions, difficult to satisfy by the deal’s deadline of June 30.

Citigroup Inc. said in a research report that it believes cinemas could be closed for some time, which would cause Cineplex to breach the condition, allowing Cineworld to scrap the deal. Another risk, Citi said, is that Universal Pictures has announced it will make new movies available online during the crisis without first giving theatres a standard exclusive period. Other studios may follow the practice as the effects of the pandemic drag on.

Cineplex spokeswoman Sarah Van Lange declined to comment on the transaction, but on Monday, the company said it and Cineworld are working to complete the deal, which still requires Investment Canada’s approval.

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A U.K. investment fund, Bluebell Capital Partners, has called on Ottawa to block the deal, saying the debt that Cineworld is taking on to complete it would put the combined company in a financially fragile state. It is not known how large a position Bluebell has in Cineplex.

Despite the market meltdown, no merger and acquisitions deals have been scrapped in Canada or the United States, Mr. Klymochko said. Eight have closed as planned.

And the market for new deals is not dead. On Monday, another Brookfield company, Brookfield Renewable Partners LP, announced it had reached a deal to buy the 38 per cent of New York-based Terraform Power Inc. that it does not already own for about US$1.6-billion, based on Jan. 10 share prices.

“I wouldn’t be surprised to see some deals fall apart – just given where the market is right now," Mr. Klymochko said. "It is pricing in that nearly half of deals are going to break, and every leveraged buyout is going to fail. I find that to be a stretch.”

Meanwhile, GMP Capital said it “no longer expects” its transaction to be completed in the time initially anticipated. As a result, the special meeting of common shareholders that had been called for April 21 has been postponed.

“The parties are continuing to work toward entering into a definitive agreement and remain hopeful that they will do so in the future," GMP said in a release. But it warned that it could not guarantee the deal would close or the terms would not change.

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If the deal is approved, it would give the investment advisers 29.6 per cent of the new public company, and existing GMP shareholders 30.7 per cent. The Richardson family would be the largest shareholder, with a 39.7-per-cent stake.

With a report from Clare O’Hara

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