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IMAX Proposes $124 Million Buyout Plan for China Subsidiary
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Imax Corporation (IMAX - Free Report) recently announced a $124 million proposal to acquire its Hong Kong-listed subsidiary that oversees its business in China. IMAX added that the proposed transaction is expected to secure around $2 million in annual public company cost savings and potential tax efficiencies.
As part of the proposal, Imax will buy the outstanding 96.3 million shares in Imax China. The offer represents an approximate 49% premium to the 30-trading day average closing price. Once approved, the deal will hand Imax full control of its business in China that was first listed in Hong Kong in 2015 when the parent company retained a 69.8% stake in Imax China Holding.
The deal is expected to supply an immediate financial boost upon its close, providing operational efficiencies and letting IMAX pursue new growth opportunities and leverage Imax technology in China.
The company plans to finance the transaction in full, either through internal cash resources or external debt financing, or possibly a combination of the two. As of Mar 31, 2023, IMAX held $99 million in cash and equivalents and had $280 million available for borrowing under the credit facility.
Shares of the company have gained 16.6% year to date compared with the Zacks Consumer Discretionary sector’s rise of 14.2% in the same time frame.
Imax currently has around 770 branded commercial locations in China, the most of any market worldwide and a key component of its international expansion outside of North America. Though China’s box office has rebounded this year from the worst of the pandemic, IMAX China’s own revenues in the first quarter increased by 24% year over year to $26.6 million.
Imax has a partnership in China with Wanda Film. As of Mar 31, 2023, through the company’s partnership with Wanda, there were 375 IMAX Systems operational in Greater China of which 361 are under the parties’ joint revenue sharing arrangements.
In the three months ended Mar 31, 2023, the company’s revenues generated from its Greater China operations represented 31% of consolidated revenues. As of Mar 31, 2023, the company had 793 IMAX Systems operating in Greater China with an additional 200 systems in backlog. Imax’s backlog in Greater China represented 43% of its total current backlog, including upgrades in system type.
The Zacks Consensus Estimate for IMAX Greater China revenues is currently pegged at $21.38 million, indicating growth of 90.2% year over year.
The company expects to record $1.1 billion in the global box office for the year 2023. It also expects adjusted EBITDA margin in the mid-30s range.
The Zacks Consensus Estimate for IMAX’s second-quarter 2023 earnings is pegged at a profit of 20 cents per share, indicating year-over-year growth of 185.71%. The consensus estimate for 2023 revenues is pegged at $374.05 million, indicating a year-over-year increase of 24.35%.
Shares of Cinemark have rallied 80.5% year to date. The Zacks Consensus Estimate for CNK’s 2023 revenues is pegged at $2.92 billion, indicating a year-over-year increase of 19.08%. The consensus mark for earnings is pegged at 52 cents per share, which has remained unchanged over the past 30 days.
Shares of Nexstar have declined 2.7% year to date. The Zacks Consensus Estimate for NXST’s 2023 revenues is pegged at $5.11 billion, indicating a year-over-year decline of 2.02%. The consensus mark for earnings is pegged at $2.88 per share, which has increased by 14 cents over the past 30 days.
Shares of DraftKings have soared 134% year to date. The Zacks Consensus Estimate for DKNG’s 2023 revenues is pegged at $3.22 billion, indicating year-over-year growth of 43.56%. The consensus mark is pegged at a loss of 29 cents per share, which has remained unchanged over the past 30 days.
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IMAX Proposes $124 Million Buyout Plan for China Subsidiary
Imax Corporation (IMAX - Free Report) recently announced a $124 million proposal to acquire its Hong Kong-listed subsidiary that oversees its business in China. IMAX added that the proposed transaction is expected to secure around $2 million in annual public company cost savings and potential tax efficiencies.
As part of the proposal, Imax will buy the outstanding 96.3 million shares in Imax China. The offer represents an approximate 49% premium to the 30-trading day average closing price. Once approved, the deal will hand Imax full control of its business in China that was first listed in Hong Kong in 2015 when the parent company retained a 69.8% stake in Imax China Holding.
The deal is expected to supply an immediate financial boost upon its close, providing operational efficiencies and letting IMAX pursue new growth opportunities and leverage Imax technology in China.
The company plans to finance the transaction in full, either through internal cash resources or external debt financing, or possibly a combination of the two. As of Mar 31, 2023, IMAX held $99 million in cash and equivalents and had $280 million available for borrowing under the credit facility.
Shares of the company have gained 16.6% year to date compared with the Zacks Consumer Discretionary sector’s rise of 14.2% in the same time frame.
IMAX Corporation Price and Consensus
IMAX Corporation price-consensus-chart | IMAX Corporation Quote
Chinese Box Office to Aid Imax’s Top Line
Imax currently has around 770 branded commercial locations in China, the most of any market worldwide and a key component of its international expansion outside of North America. Though China’s box office has rebounded this year from the worst of the pandemic, IMAX China’s own revenues in the first quarter increased by 24% year over year to $26.6 million.
Imax has a partnership in China with Wanda Film. As of Mar 31, 2023, through the company’s partnership with Wanda, there were 375 IMAX Systems operational in Greater China of which 361 are under the parties’ joint revenue sharing arrangements.
In the three months ended Mar 31, 2023, the company’s revenues generated from its Greater China operations represented 31% of consolidated revenues. As of Mar 31, 2023, the company had 793 IMAX Systems operating in Greater China with an additional 200 systems in backlog. Imax’s backlog in Greater China represented 43% of its total current backlog, including upgrades in system type.
The Zacks Consensus Estimate for IMAX Greater China revenues is currently pegged at $21.38 million, indicating growth of 90.2% year over year.
The company expects to record $1.1 billion in the global box office for the year 2023. It also expects adjusted EBITDA margin in the mid-30s range.
The Zacks Consensus Estimate for IMAX’s second-quarter 2023 earnings is pegged at a profit of 20 cents per share, indicating year-over-year growth of 185.71%. The consensus estimate for 2023 revenues is pegged at $374.05 million, indicating a year-over-year increase of 24.35%.
Zacks Rank & Key Picks
Currently, IMAX carries a Zacks Rank #3 (Hold).
Cinemark (CNK - Free Report) , Nexstar Media Group (NXST - Free Report) and DraftKings (DKNG - Free Report) are some better-ranked stocks from the broader sector which investors can consider. Currently, CNK and NXST sport a Zacks Rank #1 (Strong Buy) and DKNG carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Cinemark have rallied 80.5% year to date. The Zacks Consensus Estimate for CNK’s 2023 revenues is pegged at $2.92 billion, indicating a year-over-year increase of 19.08%. The consensus mark for earnings is pegged at 52 cents per share, which has remained unchanged over the past 30 days.
Shares of Nexstar have declined 2.7% year to date. The Zacks Consensus Estimate for NXST’s 2023 revenues is pegged at $5.11 billion, indicating a year-over-year decline of 2.02%. The consensus mark for earnings is pegged at $2.88 per share, which has increased by 14 cents over the past 30 days.
Shares of DraftKings have soared 134% year to date. The Zacks Consensus Estimate for DKNG’s 2023 revenues is pegged at $3.22 billion, indicating year-over-year growth of 43.56%. The consensus mark is pegged at a loss of 29 cents per share, which has remained unchanged over the past 30 days.