Anil Ambani's Reliance MediaWorks (RMW) and global media and entertainment industry services provider Prime Focus Ltd (PFL) have merged their global film and media services businesses.
RMW and Prime Focus promoters Naresh and Namit Malhotra will each infuse fresh equity capital of Rs 120 crore into Prime Focus at Rs 52 a share through a preferential allotment, raising the equity capital by Rs 240 crore.
This will be used to fund the recent merger of Double Negative, a European visual effects house, with PFL subsidiary Prime Focus World. After the preferential allotment and the business combination as above, the fully-diluted shareholding of PFL promoters will be 33.5 per cent, while RMW's will be 30.2 per cent.
Rs 120 crore Fresh capital infusion into Prime Focus at Rs 52 a share through a preferential allotment, raising the equity capital by Rs 240 crore
33.5% The fully-diluted shareholding of PFL promoters, after preferential allotment and the business combination
30.2% RMW's shares after the preferential allotment
As part of the transaction, the India and overseas operations of RMW's film and media services business will be combined with PFL through a slump sale. This includes a total of 1 million sq ft of facilities including studio facilities in Film City, Mumbai, 30 per cent stake in renowned Hollywood visual effects (VFX) company Digital Domain, widely acclaimed for its award winning work for Titanic and The Curious Case of Benjamin Button; and 100 per cent ownership of Los Angeles-based digital film restoration firm Lowry Digital, an Oscar winner for scientific and technical achievement in 2012. Combining the two, RMW's investment in the deal is valued just shy of Rs 500 crore.
The promoters of PFL and RMW simultaneously announced a mandatory open offer to the extent of 26 per cent of the fully-diluted share capital of PFL, at Rs 52 a share.
The combination of RMW-PFL and Double Negative, led by Matt Holben and Alex Hope, results in an integrated media services group with over 5,500 people present across 20 locations offering visual effects, stereo 3D conversion, animation and cloud-based digital media solutions that transcend the film, advertising and television industries.
For Prime Focus, the deal is a means of achieving scale, which will increase its bandwidth across core services and in the long-term, help it achieve better margins on the operating level.