Shares of Imax Corp IMX-T went for a roller-coaster ride on the last day of 2010, climbing steeply on a report Sony Corp or Walt Disney might be interested, but plunging after Imax poured cold water on the speculation.
Britain’s Daily Mail, without citing sources, reported late on Thursday that Sony may be readying a bid for the big-screen movie company at more than $40 per share. The newspaper also named Disney as a possible suitor, citing “industry sources“.
Imax shares jumped as much as 20 per cent early on Friday but shed most of those gains after Imax said in a release it was “unaware of any corporate developments” that would account for the rise.
A deal for all outstanding Imax shares at $40 each - a 58 per cent premium on Monday’s close - would value the company at more than $2.5-billion.
Traders and analysts put the takeover talk into the speculative basket, suggesting the price mentioned was too high and the year-end timing suspicious.
“I’m not going to bother wasting my time on that,” said one trader. “Too many whispers in the world.”
Investors, while trading in record volumes of Imax stock, also seemed to shrug off at least the suggested price, with the shares jumping to $32.30 early in the Nasdaq session before falling back to $28.06 by 3:55 p.m. Eastern, still a 4.5 per cent gain on Thursday’s close.
Some 25 million of Imax’s Nasdaq-listed shares had changed hands by that time, compared with a daily average of around 1.5 million over the past 12 months.
Imax’s shares were 4.1 per cent higher at $27.97 on the Toronto Stock Exchange.
Sony and Disney did not respond to requests for comment on the media report.
An Imax spokesman said: “The first Imax became aware of these rumors was through yesterday’s Daily Mail article. It has been the company’s long-standing policy not to comment on such rumors.”
Any studio takeover of Imax would hamper its growth, according to Eric Wold at Merriman Capital, as other studios would be less willing to show their films on the oversized screens and, in turn, theaters would be less inclined to install more screens.
Imax, which had put itself up for sale in the past, posted a third-quarter profit that blew past analyst expectations, and forecast rapid expansion of its theater network, especially in emerging markets such as China.
The company made a net profit of $19.2-million in 2009 after two years of losses.
Imax shares have risen tenfold in the past two years, as the company capitalized on the popularity of 3D movies such as Avatar and Toy Story 3, weathering the downturn felt by other theater chains.
“Imax has done a fantastic job over the last five years becoming a powerhouse,” said Brett Harriss, an analyst with Gabelli & Co. “Imax has an advantage over others: it’s a premium product. If you are going to get out the house you may as well spend an extra five bucks to see an Imax [movie].”
That contrasts with overall movie attendance, which is down around 10 per cent this year, Mr. Harriss said.
The company has bolstered its presence in a range of emerging markets, including deals in Russia, Thailand and Kazakhstan.
Imax has about 400 commercial movie screens and is eyeing 1,200 other potential locations, Mr. Harriss said.
In April, Imax said it had hired former Walt Disney President Mark Zoradi as a strategic adviser on such issues as film acquisition, distribution and marketing, and studio and exhibitor relationships.