RealD CEO and founder Michael Lewis said he’s relieved that the months-long process to find a buyer has reached “closure” now that a deal has been struck to sell the 3D maker to private-equity firm Rizvi Traverse Management.
In an interview with Variety, Lewis noted that Rizvi has invested in the entertainment and technology space, backing the likes of Summit Entertainment, ICM, Snapchat and SpaceX.
“They understand our business,” said Lewis. “The board felt this was the best alternative to maximize value for our shareholders.”
As part of the pact, which is expected to close next April, publicly traded RealD will be delisted from the New York Stock Exchange and will be a privately held company. Lewis will remain on board, overseeing the company as its CEO. He sounds pleased to not have to worry about quarterly earnings calls and hitting analysts’ projections every three months.
“Being a private company will allow us to make the investments we need to make,” said Lewis. “We will be able to have a longer term horizon.”
“The are buying the talent of the company and we think over the long term they want to grow the business,” said Lewis.
RealD hung out a “for sale” sign in February after another investor group, Starboard, made an unsolicited and non-binding bid to purchase the company for $12 per share. That offer was rejected and on paper it exceeds the $11 a share that Rizvi is paying, but there was no financing attached to it. Starboard did not make another offer following the strategic review, Lewis said.
As part of the process, 70 companies were contacted to gauge their interest, 35 confidentiality agreements were signed and talks were held with six different companies. Rizvi was the only company to make an offer.
“We’ve gone through a long process to find the best result for our shareholders, our employees and our customers and we think this scenario is the best result for all those constituencies,” said Lewis. “We’re happy there’s been closure to the process.”
The box office success of 2009’s “Avatar” kicked off a 3D mania in theaters, but it also led to problems. Studios rushed shoddily converted 3D films into theaters and consumers soon balked at paying a premium for an inferior experience. The format remains popular in certain foreign countries like China, but it has had to claw its way back to full health domestically. In the process, RealD’s stock took a beating and the company went through layoffs and a period of downsizing.
There has been some progress — pictures like “Gravity” and “The Martian” have performed well in the format — but Lewis acknowledged more work needs to be done.
“I’ve been in this for a long time,” said Lewis. “When 3D is done well, it’s a transportive experience. It can take you places you can’t normally go. It just has to be in the right hands with the right filmmakers.”