Image Entertainment Inc. sued a group led by film producer David Bergstein for the payment of a $4.2 million breakup fee after the nixed merger agreement between the DVD licenser and the buyout group.
Image and David Bergstein's BTP Acquisition Co. terminated the proposed takeover agreement earlier this month, saying BTP was unable or unwilling to secure financing for the transaction.
With the termination, Image said BTP is now liable to pay a $4.2 million business interruption fee according to the agreement.
BTP said in a Feb. 6 statement that it "exercised its right" to cancel the planned purchase because Image failed to meet unspecified conditions before the deadline expired. As a result, BTP wants its own $1.5 million breakup fee, according to the suit.
The acquisition was on the rocks almost since it was announced last March. The original deal was for $95 million, or $4.40 per share, which represented a 27 percent premium on Image's $3.46 closing price the day before the announcement. BTP then upped the bid to $4.68 per share after Image's board rejected the initial offer.
Shares in Image closed up 10.7 percent and continued to gain another 2.4 percent to $1.27 in after-market trading Tuesday.
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