Image to Lionsgate: Let's merge
EmptyTORONTO -- Specialty DVD distributor Image Entertainment on Tuesday told Canadian studio Lionsgate to forget their October proxy fight and to renew earlier merger talks.
"Lionsgate is still a very interesting possibility for our shareholders. We just have to come to terms," Martin Greenwald, Los Angeles-based Image Entertainment president and CEO, told analysts after his company posted a second-quarter loss and outlined plans for a radical restructuring to trim operating costs.
Image last month won a bitterly fought proxy vote against Lionsgate, which has a 19% stake in the U.S. company and has been pursuing Image for more than a year.
Despite that run-in, Greenwald said he was prepared to drop his cudgels and see Lionsgate contact Lazard Freres & Co. and a special committee of Image board members to talk about a possible merger.
"We're a public company. If Lionsgate wants to review the process and pick that up and go with it with the special committee, that would certainly be invited," Greenwald said.
The overture came as Image unveiled a second-quarter loss of $3.8 million for the three months ending Sept. 30 compared with a loss of $613,000 for the same period a year ago. Revenue of $22.8 million was slightly lower than a year ago in part because of the bankruptcy of Tower Records, which sold Image DVDs.
Greenwald also projected a loss for fiscal 2007 after earlier forecasting profitability. Shares of Image, which rose 1.1% to $3.57 during the regular session, fell 5% in after-hours trading.
"Although the currently market environment remains difficult we believe that Image remains a strong independent presence in both the home video and digital distribution marketplace," Greenwald said.