Status of Nyx's Image buy still unclear

Shareholders OK deal, but Wall Street skeptical

Investors on Monday finally seemed to have faith that Image Entertainment would be sold for about $100 million to Nyx Acquisitions, then that faith quickly eroded.

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

Image had been down that road before with other suitors that ultimately 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 just two weeks ago.

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

On Tuesday, Image said that its shareholders have 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% Tuesday to $1.92 just prior to the news, then trading was halted. When it resumed, Image sunk to a 9% loss on the day to just $1.34, about 50% less than the price Nyx said 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.

Image has exclusive rights to 3,500 DVD titles and 370 CD titles. Its Egami Media subsidiary has rights to 2,000 digital download video titles.