Some 70% of the shares voted were in favor of the deal, but those against exceeded the 10% threshold required by Hong Kong law to defeat a privatization transaction. Approximately 61% of the total “disinterested” shares of Imax China common stock were voted. The subsidiary is based in Shanghai and traded on the Hong Kong stock exchange.
“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,” said Imax CEO Rich Gelfond.
In July, Imax, which currently owns 71.6% of its Chinese subsidiary, had offered to buy the rest of it for HK$10 (about $1.28) per share, or about $124 million. The proposal to acquire the outstanding 96.3 million shares represented about a 49% premium to the 30-trading day average closing price of Imax China, the parent company said at the time. It said the deal would provide an immediate financial boost through operational efficiencies and new growth opportunities. Leading shareholder advisory firms ISS and Glass Lewis recommended shareholders vote in favor of the deal.
Last month, Canadian investment fund Letko, Brosseau & Associates, which holds around 1.7 percent of Imax China shares, said it would vote against the deal, saying it undervalued the company and would benefit Imax Corp. at the expense of minority investors.
“While disappointing, the vote demonstrates that shareholders believe, as we do, that the future of Imax China is bright. We are committed to our business in China and our team will continue to create new growth opportunities for the Imax brand and technology in this vital market for blockbuster entertainment. Furthermore, 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 stock.
Imax shares are off 1.87% at $19.45 n pre-market trade.