'The Odyssey' triumph casts IMAX suitors adrift

Behind the spectacle sits a profitable business. IMAX generated $410 million of revenue last year, converting 60% into gross profit. A 165% share-price rally since 2023 has left them trading at around 13 times adjusted EBITDA, richer than theater chain Cinemark CNK.N but a discount to venue operator Sphere Entertainment SPHR.N.

For potential suitors, the path will be expensive. Any buyer, as the Wall Street Journal reported was being sought in May, paying a conventional 30% premium would imply a nearly $3 billion enterprise value, including net debt, roughly 16 times this year’s expected EBITDA, according to Visible Alpha.

If lenders cap buyout shops at $1 billion, near the ceiling for earnings tied to Hollywood’s release calendar, the equity check would be about $2 billion. Even with 9% annual EBITDA growth and a later sale at 14 times, investors would earn just a 15% annualized return over five years, Breakingviews calculates, less than private equity firms typically promise.