IMAX Corporation announced it has filed a proposal to acquire the outstanding 96.3 million shares in IMAX China, a Hong Kong-listed subsidiary established by IMAX Corporation to oversee its business in Greater China, for approximately HK$10 per share in cash / $124 million. The offer represents an approximate 49% premium to the the 30-trading day average closing price. Upon approval of the offer and the scheme of arrangement, IMAX Corporation will own 100% of IMAX China.
The proposed acquisition of IMAX China will enable greater operational flexibility to pursue new growth opportunities and applications of IMAX technology in the Chinese market. The transaction is expected to be accretive to IMAX Corporation immediately following completion; for instance, IMAX Corp. first quarter 2023 Adjusted EBITDA would have been $5 million, or 18%, higher including the IMAX China minority interest. The transaction could also unlock approximately $2 million of annual public company cost savings as well as potential tax efficiencies. IMAX Corporation intends to finance the transaction in full through its internal cash resources and/or external debt financing, the statement said.
“This deal is a win-win for IMAX Corporation and IMAX China, as it unlocks significant financial benefits for IMAX while offering IMAX China investors a meaningful premium to current market prices,” said Rich Gelfond, CEO of IMAX Corporation. “The public listing of IMAX China raised capital to help fuel a period of tremendous growth for IMAX in China, and this transaction has the potential to usher in a new era of expansion for our brand and technology in this thriving market for entertainment.”
The first commercial IMAX location opened in China in 2007 and IMAX China was established as a subsidiary of IMAX Corporation in 2011. IMAX China attracted financial partners in the market to help drive growth and listed on the Hong Kong Stock Exchange in October 2015. Today, there are more than 770 IMAX commercial locations in Greater China — the most of any market in the world.
Upon completion of the transaction, Daniel Manwaring will continue as IMAX China CEO, reporting to Gelfond and overseeing all local business functions, which include distribution, marketing, finance and additional areas focused on the Company’s business interests in China. IMAX China will remain headquartered in Shanghai with offices in Beijing, according to the statement.
Morgan Stanley is serving as IMAX Corporation’s financial advisor, and Freshfields Bruckhaus Deringer is serving as IMAX Corporation’s legal advisor.
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