Disney courtship rumors push shares up 18%
HOLLYWOOD — Recently rumored as a takeover target of Disney or another big entertainment group, Imax Corp. triggered an 18% rise in its shares Thursday when the giant-screen exhib disclosed the hiring of a pair of investment banks to find a buyer or merger partner for the company.
Imax, which is based in Toronto and operates 210 theaters in 26 countries, said it has retained Wasserstein, Perella & Co. and Goldman, Sachs & Co. to conduct the strategic search.
Wasserstein, Perella is Imax’s biggest shareholder, with a 30% stake, and Imax acknowledged in a statement the search was prompted in part by the firm’s desire to cash out of its investment. Goldman, Sachs conducted the company’s 1994 initial public offering.
“Our priority is to maximize Imax’s long-term business potential for the benefit of its shareholders, employees, customers and the viewing public, and we believe that this may be best accomplished by aligning ourselves with a larger entity,” Imax co-CEOs Richard Gelfond and Bradley Wechsler said in a statement.
As to the rumors, “It makes a lot of sense for Disney,” analyst Daniel O’Neill of Credit Suisse First Boston in New York said of recent takeover talk. “Not only would they can gain access to the Imax technology but also to the company’s digital cinema technology. And Disney is by far the studio most interested in digital cinema.”
Imax bought Digital Projection Intl. last year, a large-event projection business that holds patents connected to a Texas Instruments system for digitally projecting movies into theaters.
Disney’s animation and live-action feature “Fantasia 2000” soon will begin a second run of the Imax circuit, and DreamWorks’ animated “Shrek” is set for an large-screen debut in December 2001. The company’s circuit also includes 87 theaters that exhibit 3-D specialty fare.
“Disney could take their entire animated library and put it into the Imax format,” suggested O’Neill.
Disney officials were unavailable for comment.
A nonstrategic, institutional investor may surface simply to take over the Wasserstein, Perella interest in Imax, O’Neill said. But a companywide buyout likely would come with an effective price of about $35-$40 a share, or $1.2 billion to $1.5 billion.
News of Imax’s strategic initiative sent the stock up $4.16 to close at $26.50 on Thursday.