RealD to Be Acquired By Private Equity Firm For $551 Million Cash

RealD abruptly canceled its earnings call Monday after saying it reached a deal to be acquired by private equity investor Rizvi Traverse Management for $551 million cash. The acquisition is expected to close in RealD’s fiscal Q4 ending March 31 or soon thereafter, RealD said in a statement. Rizvi Traverse will take RealD private, RealD said. Since the start of 2015, RealD CEO Michael Lewis has discussed exploring “strategic alternatives” to determine the company’s future fate (see 1502090048), but declined to elaborate. Lewis will remain CEO after the Rizvi Traverse takeover, RealD said. Besides struggling with declining 3D box office receipts, RealD failed to develop and monetize any long-sought-after consumer business. However, also on Monday, RealD disclosed in a 10-Q SEC filing that it signed a contract Aug. 17 with an unnamed “computer technology company” to develop and commercialize RealD’s “intelligent backlight” technology for tablets and smartphones. Announced in June 2014, RealD touted intelligent backlight as enabling the manipulation of light sources on a mobile display for glasses-free 3D viewing at low power (see 1406060056). RealD’s plan then was to license the technology to tablet and smartphone makers for the commercial introduction of mobile devices in calendar 2015, but that never materialized. As part of its contract with the unnamed computer technology company to commercialize intelligent backlight, RealD has “dedicated a group of employees and resources to support and fulfill our obligations under this agreement,” the company said in its 10-Q. RealD doesn't expect the contract to yield commercialized product this fiscal year, it said. RealD was paid a $7.5 million "upfront" license fee under the contract and will draw undisclosed patent royalties when commercial products are introduced and shipped, it said. To account for that business activity, RealD has created a new "consumer" operating segment, its fourth after "cinema," "3D consumer electronics" and "3D professional," it said.