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RealD to Go Private in $551 Million All-Cash Deal

Company will be acquired by Rizvi Traverse Management, LLC at $11 per share

RealD is set to go private in a $551 million all-cash deal. The company will be acquired by Rizvi Traverse Management, LLC and valued at $11 per share.

The proposed transaction is subject to closing conditions including receipt of shareholder and regulatory approvals, though RealD’s Board of Directors has already given it the thumbs-up and is recommending that stockholders do the same. The transaction is currently expected to close in the company’s fourth quarter of fiscal 2016 or shortly thereafter.

If a Feb. 2016 vote gives the green light, RealD shareholders will receive $11 in cash — a 19 percent premium from the relevant measuring stick trading day — for each share of the company’s common stock they hold.

RealD currently trades on the New York Stock Exchange under ticker RLD. At the time of this writing, shares are trading up at $10.85 apiece — a $0.28 increase, or 2.65 percent higher than Friday’s close.

CEO Michael V. Lewis’ RealD has been dancing around selling for the better part of 2015 — it appears the company finally found the right suitor at the right time. Rizvi Traverse is a private equity investment firm that spreads money around the entertainment, media, and tech sectors.

The 3D tech and glasses company actually had a better offer — financially, at least — from major shareholder Starboard Value earlier this year. Stockholders would have grabbed an extra buck per share by that valuation, totaling $600 million.

RealD had been losing money as public intrigue in 3D films leveled off prior to this calendar year. However, a strong 2015 and 2016 big-screen lineup — along with dozens of superhero-esque films projected out over the next five years — may be its fiscal saving grace. If this summer’s blockbuster boost is any indication, the future may be bright for RealD.

Lewis explained on Monday that the “flexibility and resources” afforded a private company makes the move a good one looking forward.

“Since founding RealD in 2003, we have built the Company into the world’s leading 3D cinema platform, with over 27,000 worldwide screens,” he said. “I am excited about the future of RealD, where in partnership with Rizvi Traverse, we can continue to maximize the value inherent in RealD’s cinema platform and leading IP portfolio.”

Lewis will reinvest his equity into the transaction and will continue to serve in his top roles.

“Over the past year, the RealD Board of Directors, in consultation with its advisors, has engaged in a comprehensive review of strategic alternatives to enhance value for shareholders,” Frank J. Biondi, Jr., lead independent director of RealD, commented. “This transaction with Rizvi Traverse concludes that review and provides immediate and substantial cash value to RealD shareholders at a significant premium to the Company’s unaffected share price.”

“RealD is the market leading 3D cinema platform with a history of innovation and strong growth prospects. We are honored that the Board of Directors of RealD has selected Rizvi Traverse to partner in their future growth,” Rizvi Traverse Managing Partner Ben Kohn said. “We are excited to partner with Michael Lewis and the current management team in this new chapter for RealD.”

Moelis & Company LLC is acting as sole financial advisor and Wachtell, Lipton, Rosen & Katz and Cooley LLP are acting as legal advisors to RealD’s Board of Directors. Freshfields Bruckhaus Deringer US LLP is acting as sole legal advisor to Mr. Lewis. Latham & Watkins LLP is acting as sole legal advisor to Rizvi Traverse.