New York-based investment firm Starboard Value has made an offer to acquire RealD Inc., the struggling 3-D cinema technology company based in Beverly Hills.
Starboard Value, which specializes in undervalued small-cap companies, disclosed in a Securities and Exchange Commission filing that it had taken a nearly 10% stake in RealD and had offered to buy the remainder of the business for $12 a share, or nearly a 30% premium above the current share price.
In a letter today to RealD Chief Executive Michael Lewis and the company's board, Starboard stated the company would be better off as a private business, saying RealD's "near-term financial performance ... may suffer given the challenged release schedule for 3D films," according to the regulatory filing.
The letter added that RealD would be "far better positioned to execute on the opportunities as a private company."
In its filing, Starboard added that it would "devote all necessary resources to completing a transaction, and looks forward to working with Mr. Lewis and the board to expeditiously negotiate a contract that will benefit everyone involved."
The shares closed Wednesday at $9.27 but soared in after hours trading on news of the bid, increasing more than 25% to $11.67.
In a statement, RealD said its board of directors will "carefully review and consider the unsolicited, non-binding indication of interest from Starboard." The company added that it is "always open to constructive discussions about opportunities to increase stockholder value. The company will continue to take actions it believes are in the best interest of all RealD stockholders."
RealD Inc. earlier this year signed an agreement with China's Wanda Cinemas that would double RealD's screen count in one of the world's biggest film markets.The company posted a third-quarter loss of $271,000, compared with a loss of $4.2 million a year ago.