Imax Corp. (NYSE: IMAX) (TSX: IMX) plans to open 75 new theatres in China as part of a revenue sharing deal with Wanda Cinema Line Corp., sending its shares up more than 10 percent in NYSE.
Wanda Cinema Line is the largest theatre operator in China and is on a very aggressive build-out trajectory, said Imax CEO Richard Gelfond. Wanda's theatres, including their Imax(R) theatres, have been very successful, and we believe this large rollout of Imax theatres will be a very successful arrangement for both companies.
Greater China is Imax's second-largest market globally, with some of the network's highest-grossing Imax theatres in the world. The company believes that the deal, coupled with the significant opportunity the Greater China exhibition market presents, provides the strategic rationale for the establishment of Imax China.
China has been our fastest-growing market in the world and extremely successful on a per-screen basis, said Mr. Gelfond. We have been working for almost a year on a new corporate and legal structure to operate in China to reflect our expanding business in the region and facilitate our transition to the increased use of a joint revenue sharing model. This agreement with Wanda gives us significant momentum to expand our network in China.
Imax also announced the formation of Imax China unit to oversee the expansion of its rapidly growing business in the market.
The deal with Wanda is Imax's first full revenue-sharing agreement in China and its largest single international partnership to date, brings the total number of Imax theatres slated to be open or in backlog in Greater China to 177 over the next few years.
Under the terms of the new partnership, Imax will install its latest digital theatre system technology into 25 of the exhibitor's multiplex locations this year, with the remainder to be rolled out in 2012, 2013 and 2014.
Wanda, a subsidiary of Dalian Wanda Group, is the largest cinema operator in the People's Republic of China, as well as the country's largest operator of Imax theatres, with 10 theatres open to date and another 81 theatres in backlog.
With the latest deal, Wanda is poised to become the largest operator of Imax theatres outside of North America and the second-largest operator of Imax theatres worldwide with a total commitment of 91 theatres.
Shares of Imax were up $2.85, or 10.11 percent, at $29.75 in Thursday morning trade on the NYSE.