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Anil Ambani's Reliance Media Works (RMW) and global media and entertainment industry services provider Prime Focus Ltd. (PFL) have merged their global film and media services business.
RMW and the promoters of Prime Focus, Naresh and Namit Malhotra, will each infuse fresh equity capital of Rs 120 crore into Prime Focus at Rs 52 per 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 PFW. Post the preferential allotment and thebusiness combination as above, the fully diluted shareholding of thepromoters of PFL will be 33.5%, while RMW will be at 30.2%.
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 one million square feet of facilities including studio facilities in Film City, Mumbai, 30% stake in renowned Hollywood VFX house, Digital Domain, widely acclaimed for its award winning VFX work on Titanic and The Curious Case of Benjamin Button etc. and 100% 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 dealis valued just shy of Rs 500 crore.
The promoters of PFL and RMWs imultaneously also announced the mandatory open offer in Prime Focus, to the extent of 26% of the fully diluted share capital of PFL, at INR 52 per share, in compliance with applicable SEBI rules and regulations.
The combination of RMW - PFL and Double Negative, led by Matt Holben and Alex Hope, results in an integrated media services group with over 5500 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.
The combined revenues in excess of Rs 1,800 crore (including the recently announced merger of Double Negative with Prime Focus World), and robust order pipeline of Rs 2,000 crore. For Prime Focus, the deal also is a means of achieving scale which will increase its band width across core services and in the long term, help it achieve better margins on the operating level. Namit Malhotra will be the Executive Chairman and Global CEO of Prime Focus Ltd.
"We are hugely excited about the transformational growth opportunity created by the powerful combination of the global film and media services business of Reliance Media Works and Prime Focus," said Amitabh Jhunjhunwala, Group Managing Director, Reliance Group. "Namit is an enormously passionate leader, who has created and run a highly successful global media services business. We are delighted to have the opportunity to support PFL as the Company moves to the next orbit of growth under Namit's dynamic and 'turbo-charged' leadership", he added.
"This is a very exciting time in the life of Prime Focus", said Malhotra, Founder, Prime Focus and Executive Chairman & Group CEO, Prime Focus Group. "From beingable to partner the world's finest visual effects provider Double Negative, to having the Reliance Group come on board, to help mobilise our strategy in building the bridge between the West and the East. I am very confident about the benefits this combination brings to all our customers, employees and stakeholders worldwide."
The body of work handled by the new powerhouse includes worldwide blockbusters and critically acclaimed films, such as The Dark Knight Trilogy, Transformers 4, Inception, Gravity, Harry Potter, and Avatar, to name a few. Equally within India, the PFL and RMW combination brings integrated services to the Bollywood industry from equipment rental, and shooting stages up to final digital distribution - a true one stop service. The combined group will also have the world's first hybrid cloud-enabled Media ERP platform. This unique platform virtualizes the content supply chain and helps broadcasters,studios, brands, sports and digital businesses manage their business of content, by driving creative enablement, enhancing ecosystem efficiencies and sustainability, reducing costs and realizing new monetisation opportunities.
EY India was the exclusive Advisor to Reliance Media Works for the transaction, and Centrum Capital was the exclusive Advisor to Prime Focus.
