What happened
An expanding strike by talent in the film and TV industry didn't dissuade investors from piling into Imax(NYSE: IMAX) stock on Thursday. Shares of the big-screen entertainment purveyor rose by just under 6% as a result, stomping the 0.8% gain of the S&P 500 index.
So what
After market hours Wednesday, Imax announced that it has made a formal offer to acquire the chunk of associated business Imax China that it doesn't already own. It is offering 10 Hong Kong dollars ($1.28) per share in cash for the outstanding stake for Imax China, which is listed on the Hong Kong Stock Exchange. All told, that shakes out to a potential outlay of HK$124 million ($15.8 million).
That level represents a premium of roughly 49% to Imax China's 30-day average closing price, Imax said in the press release trumpeting the offer. The specialty cinema company wrote in the document, "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."
Referring to Imax China's 2015 initial public offering (IPO) on the Hong Kong bourse, Imax quoted its CEO Rich Gelfond as saying that the listing "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."
Now what
In terms of fundamentals, Imax said that its owning 100% of Imax China would be immediately accretive to its results. Theoretically, the company said, its first quarter non-GAAP (adjusted) earnings before taxes, interest, depreciation, and amortization (EBITDA) figure would have been 18% higher at $5 million had the Imax China minority stake been included.
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