Image calls off Nyx merger
Collects $2.5 million in business interruption fees
By Susanne Ault -- Video Business, 4/20/2009
APRIL 20 | Image Entertainment has has terminated its merger agreement with Nyx Acquisitions, citing the failure to receive a payment of $1 million last week.
The move represents Image’s second derailed merger in as many years. Last year, Image failed to complete a merger with BTP Acquisitions Corp., parent of ThinkFilm and Capitol Films, though it did come out with distribution rights to some ThinkFilm titles.
“Hopefully we can grow the business without the distraction of two elongated merger processes,” said Image president Jeff Framer. “It’s supposed to be fairly quick once you get shareholder approval. In both of these cases, we got approval, but the buyer had difficulty in coming up with the financing.”
Like the earlier deal with BTP, the Image-Nyx alliance has been a rocky one. After agreeing to acquire Image for $100 million, or $2.75 per share in cash plus the assumption of debt, last November, digital delivery company Nyx has repeatedly failed to come up with scheduled payments.
Most recently, Nyx was to deliver to Image the $1 million by April 17, in order to secure a deadline extension to April 20 to complete its purchase of the DVD supplier. Image and Nyx were at one point expected to complete the merger in February. Nyx was required to pay many rounds of additional funds into the deal because it was repeatedly unable to meet finalization deadlines. These payment failures led Image to call Nyx in breach of contract twice in recent weeks.
Image has collected $2.5 million in business interruption fees from Nyx.
“Despite Image’s willingness to close the merger, Nyx was unable to finance the transaction,” Framer said. “The company is well-positioned to grow and remains committed to enhancing shareholder value. In this difficult economic environment, we believe the immediate need is to focus our energies on our business.”
The Nyx deal represented a a nearly 300% premium over Image’s share price at the time the deal was struck, but was for less than the previous proposed deal with BTP. In the BTP deal, Image shareholders at one point stood to receive $4.68 per share.
