FAST NEWS: Shareholders reject IMAX China’s privatization plan

The latest: IMAX China Holding Inc. (1970.HK) announced Tuesday that shareholders have rejected a proposal by its parent and controlling shareholder IMAX Corp. (IMAX.TO) to privatize the company.

Looking up: Following the rejection, IMAX Corp. can’t make another privatization offer for the next 12 months. Since the original offer price was only 9.65% higher than IMAX China’s share price before the offer, the company may need to sweeten its bid if it wants to make another privatization bid.

Take Note: Approximately 70% of the 58.69 million disinterested shares that voted on the offer were in favor, while approximately 18.28% voted against. That caused the bid to fail, since stock exchange rules require at least 75% of votes to be in favor to succeed.

Digging Deeper: IMAX China is the separately listed Chinese subsidiary of big-screen theater giant IMAX Corp. It operated 779 IMAX theaters in Greater China at the end of June this year, with most of its revenue coming from film remastering, as well as system sales and maintenance of big-screen technology. IMAX Corp. announced its plan to privatize IMAX China in July, but the acquisition price was only one-third of the 2015 IPO price. That, coupled with the fact that IMAX China is financially health and made a profit last year, may have led some investors to reject the buyout offer on the belief that it was too low.

Market Reaction: IMAX China shares fell 3.8% on Wednesday, and dropped another 1.6% to HK$7.58 by the midday break on Thursday. The stock now trades in the middle of its 52-week range.

Translation by A. Au

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