IMAX’s Proposal to Buy China Unit Falls Through
Shareholders Reject IMAX’s Offer to Acquire IMAX China
IMAX China announced on Tuesday that its shareholders have rejected a proposal from its U.S.-based parent company, IMAX, to purchase the remaining stake in the Hong Kong-listed company for approximately $124 million. The rejected offer comes after IMAX, already owning 71.6% of its Chinese subsidiary, had proposed to acquire IMAX China at HK$10 ($1.28) per share in July, representing a 49% premium to the 30-day average closing price at that time.
Shareholders’ Vote Results in Proposal Rejection
IMAX China’s remaining 28.4% stake, valued at about $98.7 million based on the company’s last closing price, will not be acquired by IMAX. The proposed purchase failed to secure approval, as less than 75% of the voting rights of shareholders were cast in favor of the scheme, and more than 10% of the votes were against the resolution for the scheme’s approval. However, IMAX China’s shares will continue to be listed on the stock exchange, according to a statement released by the company.
IMAX’s Objectives for the Acquisition
IMAX had aimed to gain full control of its China unit to enhance operational flexibility and apply its advanced technology within the Chinese market. By doing so, IMAX hoped to strengthen its presence and capitalize on the potential opportunities in China’s booming entertainment industry.
Financial Implications of the Proposal
The rejection of IMAX’s buyout proposal has impacted the financial landscape of the deal. The acquisition would have involved a significant investment of $124 million. However, due to the failure of the proposal, IMAX will not be able to proceed with its plans to expand its presence in China through the acquisition of its subsidiary.
It is important to note that IMAX China’s shareholders’ decision to reject the offer does not necessarily indicate a lack of confidence in the company’s prospects. Instead, it reflects the diversity of opinions among shareholders and the need for a broader consensus before such a significant transaction can be completed.
The outcome of this proposal highlights the complexities and challenges involved in cross-border acquisitions, particularly in emerging markets like China. Despite the setback, IMAX China remains committed to its growth strategy and will continue to explore alternative avenues to expand its business within the Chinese market.
($1 = 7.8197 Hong Kong dollars)
