Image agrees to $100 million buyout
Digital delivery company Nyx Acquisitions to buy indie supplier
By Susanne Ault -- Video Business, 11/20/2008
NOV. 20 | After a couple of misfires, Image Entertainment has secured another buyer, Nyx Acquisitions, which has agreed to purchase Image for $100 million.
Under this definitive merger agreement, Nyx will assume Image’s outstanding debt, and Image shareholders will receive $2.75 per share in cash. That represents a nearly 300% premium over Image’s closing 69¢ share price on Thursday.
Although advantageous to shareholders, especially considering poor overall U.S. economic conditions, this pact grants shareholders less money than the previous terms with BTP Acquisition Co. In that proposed merger arrangement, which collapsed earlier this year, Image shareholders at one point stood to receive $4.68 per share.
Still, Image stockholders owning 38% of its outstanding shares have already voted in favor of the merger transaction with Nyx. Image’s board of directors also has unanimously approved the deal.
Pending regulatory review and final approval by stockholders, Image expects to close the acquisition by the first quarter.
Image management hopes the merger will boost the company’s emerging digital business. Nyx is a subsidiary of privately held Q Black LLC (also known as Q Black Media), which is an investment group that works to produce content that converges digital and traditional delivery methods.
“This deal allows Image to expand its overall business and grow as a vertically integrated entertainment company,” Image president David Borshell said. “By combining Image’s established infrastructure and highly regarded home video, digital and TV distribution capabilities with Q Black’s content creation and digital technology expertise, the parties create a much larger and exciting organization, one very much focused on feature films and well prepared to take advantage of evolving distribution strategies.”
Image has long sought an acquisitions partner that sees value in its entire business. Recently, Lionsgate aggressively pursued an Image purchase, but that was ultimately tabled largely due to Image's concern that the company would be gutted after the acquisition. It was understood that Lionsgate would keep Image’s 3,500-title DVD library and discard much of the rest.
Q Black Media CEO Joe Q. Bretz indicated that Image will continue to roll out new titles under its umbrella. He said he was impressed by Image’s financial gains of late. For the first six months of fiscal 2009, Image posted $1.2 million net income. That compares to $6.3 million in red ink for the same frame the prior year.
“The accomplishments of its senior management team over the past several months are undeniably impressive,” said Bretz. “They’ve built a solidly growing revenue base by leveraging their distribution capabilities across all formats and platforms. Our international reach and digital expertise in conjunction with the drive and vision of the current management team makes Image a force to be reckoned with. Image will continue to acquire high-profile programming, develop new and exciting original content from concept to completion and, of course, utilize its vast library.”
Martin Greenwald, Image’s chairman of the board, believes Q Black will continue to fuel Image’s turnaround.
“Joe is committed to keep Image Entertainment a well-respected content and distribution entity and has designed an exciting and aggressive road map to expand Image’s reach into new and growing technologies,” said Greenwald.
Although past acquisition hopes have fizzled, Image’s Borshell noted that the company has always worked in the best interest of shareholders.
“Executive management and the company’s board of directors never gave up on finding a way to maximize shareholder value, even during a challenging financial environment,” said Borshell. “We have been successfully executing the business plan we put in place about a year ago and, by doing so, developed a strong and healthy business, which obviously kept potential suitors interested.”
