Imax announced Wednesday that it plans to spend $124 million to get full ownership of Imax China. The subsidiary is listed on the Hong Kong stock exchange and was established in 2011 by Imax to oversee its business in Greater China, which has become a key market for the exhibition company.
Imax creates wide-screen technology that enables theater owners to charge premium prices — it is also a favorite with big-budget filmmakers such as Christopher Nolan and Michael Bay, who use the company’s proprietary cameras to produce their movies.
Since COVID, Hollywood films have struggled to attract the same level of business as they did pre-pandemic, but local-language titles such as “The Wandering Earth 2” and “Lost in the Stars” have been huge hits when they have screened in Imax.
As part of the proposal, Imax will buy the outstanding 96.3 million shares in Imax China. The offer represents an approximate 49% premium to the 30-trading day average closing price. Upon approval of the offer, Imax Corporation will own 100% of Imax China.
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Imax predicts that the transaction will unlock approximately $2 million of annual cost savings as well as lead to tax efficiencies. The company will finance the deal by tapping its current cash reserves, as well as possible debt financing.
“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.”
Morgan Stanley is serving as Imax Corporation’s financial advisor. Freshfields Bruckhaus Deringer is acting as Imax Corporation’s legal advisor.
