Crest Set To Acquire Rich Animation
Crest Communications will acquire Los Angeles-based Rich Animation Studios. According to sources, the company is expected to fork out close to $5 million for acquiring the lock, stock and barrel. The two companies have had a strategic relationship for a long time.
"Crest's board has already cleared the deal. However, detailed financial modalities are being worked out at the moment. A board meeting is slated for today to work on these modalities" a company source confirmed the development to Business Standard.
The source said that the company has committed to acquiring the studio and has not taken a decision on whether the acquired entity will remain a 100 per cent subsidiary yet to finalise modalities acquisition is expected to be funded through internal accruals.
Senior company officials are visiting US to finalise modalities of acquisition. The deal is expected to be a combination of stock and cash. Richard Rich, the promoter of Rich Animation Studio is expected to join the board of Crest Communications. "Rich will focus on the creative aspect of the business. He offered to sell the company as there was a need to infuse capital in the business. Their requirement is close to $ 5 million. He will be a member of the board on Crest Communication. We have already approached a legal firm in the US for advice on seeking various regulatory approvals," the source added.
The source said that the company expects its revenues through assignments to top Rs 22 crore.
However, the greater impact of various alliances and deals struck by the company will be felt only in the next financial year.
Sources say that the company will get access to the revenues from the existing order book of Rich Animation.
"Valuers and advisors in the company say that there are no liabilities that will be passed on to Crest. The capital infusion will result in a new lease of life for the studio and more business for Crest," the source said.
According to market sources, the Crest Communications stock has rallied in anticipation of this announcement for the past two weeks.
The stock which was traded at Rs 596.70 on February 1, 2000 closed yesterday at Rs 818.70.