(Reuters) – Britain’s Cineworld Group Plc said on Friday it abandoned its $1.65 billion (1.32 billion pounds) deal to buy Cineplex Inc, citing what it termed the Canadian company’s breaches in the merger agreement between the cinema operators.

The deal was announced in December and would have made the British firm North America’s biggest cinema operator.

“As a consequence of … Cineplex’s unwillingness to cure the breaches, Cineworld has notified Cineplex that it has terminated the Arrangement Agreement with immediate effect,” Cineworld said in a statement.

Cineworld did not specify what the breaches were, adding that a “material adverse effect” occurred with the Canadian company.

Cineplex issued a separate statement denying the claims of Cineworld and saying that Cineworld’s allegations stem from the impact of the coronavirus outbreak.

Cineplex in turn accused its British rival of avoiding its obligations under the merger agreement in light of the pandemic.

Much like most other out-of-home entertainment businesses, movie theater chains have also been hit by lockdowns and social distancing measures, which further added to the challenges because of a broader consumer shift to streaming services.

“The arrangement agreement explicitly excludes any “outbreaks of illness or other acts of God” from the definition of material adverse effect,” Cineplex said.

Cineplex added that Cineworld did not have the legal basis to terminate the deal and it will commence legal proceedings against the British cinema operator.

Cineplex said that it would file a lawsuit to recover damages from the London listed operator, which in turn said it reserved its own right to seek damages from the Canadian company.