Image pulls plug on merger
Stock plummets after Nyx buyout effort fizzlesThe fourth time apparently is not a charm.
Image Entertainment formally pulled the plug Monday on protracted merger negotiations with Nyx Acquisitions after it failed to deposit an additional $1 million into the business interruption fee account by the end of the business day April 17.
Nyx, a subsidiary of San Francisco-based Q-Black LLC, had promised to pay the amount in order to extend the closing of the $100 million deal for a fourth time.
The acquisition, approved by Image shareholders in February, called for Nyx to pay $2.75 per share in cash ($60.2 million), in addition to assuming all outstanding debt, for a total purchase price of $100 million.
To date, Chatsworth, Calif.-based Image has received $2.5 million from Nyx in fees related to extending the closing date.
"Despite Image's willingness to close the merger, Nyx was unable to finance the transaction," said Jeff Framer, president of Image.
He said the distributor remained well positioned to grow and remained committed to enhancing shareholder value.
Analysts all along have questioned Nyx ability to secure funding in light of the current credit crunch.
"In this difficult economic environment, we believe the immediate need is to focus our energies on our business," Framer said.
Image shares fell 23% to $1.03 in midday trading April 20.