Imax Corp’s plan to buy out the portion of its China operations it did not already own failed to gain enough support from shareholders Monday, effectively nixing the $124 million deal.
Just 70% of Imax China shareholders voted in favor of the plan at an extraordinary general meeting held Monday. Hong Kong Law requires 90% approval, the company said in a statement.
“Even though our proposal received the vast majority of votes cast, and support from both leading independent proxy advisory firms, the vote did not achieve the threshold needed for approval,” CEO Rich Gelfond said. “While disappointing, the vote demonstrates that shareholders believe, as we do, that the future of IMAX China is bright.”
The company announced its plans in July, stating that it had reached a deal to buy up 96.3 million shares in its Hong Kong-listed subsidiary. The plan set a 49% premium on the stock’s price at the time.
Taking full control of the subsidiary was part of the premium screen company’s growth plan, which depends in part on the Chinese market. “This transaction has the potential to usher in a new era of expansion for our brand and technology in this thriving market for entertainment,” Gelfond said at the time.
China generated $86.3 million in revenue for Imax in the12 months that ended in June. That represented about 25% of the company’s total $351.7 million revenue for the period.
China has 779 Imax screens as of June 30, reprsenting about 48% of Imax’s total 1,638 screens worldwide, according to its quarterly report.
In the statement Tuesday, Gelfond said the company remains “We are “committed to our business in China” and it will “continue to create new growth opportunities for the Imax brand and technology in this vital market for blockbuster entertainment.”
The company also has $124 million it can now spend elsewhere.
“We will explore opportunities to deploy the incremental capital intended for this transaction through alternate means of creating shareholder value, such as share repurchases of Imax Corporation stock,” the statement said.
In morning trading, New York Stock Exchange-listed Imax shares slipped 20 cents, or 1%, to $19.25. The stock has gained 34% since the start of the year.