STX Entertainment Eyes ‘Transformative' Deal After Shelving IPO

(Bloomberg) -- STX Entertainment, the U.S. filmmaker backed by internet giant Tencent Holdings Ltd., is pursuing a “transformative” deal after shelving a Hong Kong initial public offering, according to an internal memo seen by Bloomberg News.

The Burbank, California-based company let its IPO application lapse following recent market turmoil, according to the memo sent by STX Chairman Robert Simonds to employees. While preparing for the listing, it received approaches about opportunities that were “more attractive and value-creating,” Simonds said in the memo.

STX, which was targeting about $500 million from the IPO, had hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to arrange the share sale, people with knowledge of the matter said in November. The market and political conditions in the region have “significantly deteriorated” since STX started the listing process, according to the memo.

The filmmaker and distributor has a strong balance sheet that allows it to wait out the volatility, it said. STX is now “actively engaged” in “one exciting process” that when completed will be transformative to its business, according to the memo. It didn’t provide further details.

STX more than doubled revenue across all lines of business in fiscal year 2018, with positive cash flow and more than $160 million of cash on its balance sheet, the memo shows. A representative for STX declined to comment. TheWrap reported the memo earlier.

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