Street has doubts about Image sale

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Investors on Tuesday finally seemed to have faith that Image Entertainment would be sold for about $100 million to Nyx Acquisitions.

Then that faith eroded quickly.

Nyx said in November that it intended to pay $2.75 a share for Image, though the stock traded for only 69 cents at the time.

Image had been down that road before with other suitors that proved unable to consummate a deal, and Wall Street is skeptical this time as well, which is why Image stock still traded under a dollar two weeks ago.

The stock almost doubled Feb. 12 and has been bouncing up and down since as investors placed their bets on whether an acquisition actually will happen this time.

On Tuesday, Image said its shareholders had approved the sale and that it has asked Nyx to close the transaction by Thursday, though it will allow about two weeks for Nyx to finalize its financing.

That additional time spooked Wall Street. Image shares shot up 31% on Tuesday to $1.92 just before the news, then trading was halted. When it resumed, Image sank to a 9% loss on the day to $1.34, about 50% less than the price Nyx says it will pay for the stock.

Nyx is a subsidiary of Q Black, run by film, TV and music producer Joe Bretz. After the acquisition — if there is to be one — his intention is to run Image as a private company. (partialdiff)
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