Reliance Group entity, Reliance MediaWorks (RMW) and Prime Focus Ltd. (PFL) in an major announcement yesterday are combining their global Film & Media Services business to enhance industry leadership in India and across the globe.
With 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 state-of-the-art operations in India, Los Angeles, London, Vancouver, Singapore, Beijing etc. and global talent pool of over 5,500 supremely talented and diverse people; the equity infusion of Rs 240 crore at Rs 52 per share into PFL by RMW and the Promoters of Prime Focus, in equal proportion deal proceeds will be used to fund the recent merger of Double Negative and Prime Focus World.
Namit Malhotra will be the executive chairman and Group CEO for the Prime Focus Group and will continue to manage operations of Prime Focus. 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, aggregating Rs 240 crore. The equity proceeds will be used to fund the recent merger of Double Negative with PFW.
As part of the transaction, the India and overseas operations of RMW’s Film and Media Services business, which has shown a significant turnaround towards profitability in the last few quarters, will be combined with PFL through a slump sale. The net consideration will be paid in the form of fresh equity shares of PFL valued at Rs 52 per share. Post the preferential allotment and the business combination as above, the fully diluted shareholding of the promoters of PFL will be 33.5 per cent, while RMW will be at 30.2 per cent.
The promoters of PFL and RMW simultaneously also announced the mandatory open offer in Prime Focus, to the extent of 26 per cent of the fully diluted share capital of PFL, at Rs 52 per share, in compliance with applicable SEBI rules and regulations.
“This is a very exciting time in the life of Prime Focus”, said Namit Malhotra, Founder, Prime Focus and Executive Chairman & Group CEO, Prime Focus Group. “From being able 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 combination of RMW – PFL and Academy Award winning Double Negative, led by Matt Holben and Alex Hope, is set to create the world’s largest and the most 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. The combination promises to bring instant benefits to global clients, with new levels of creativity, technology innovation, truly integrated Digital Media Services, unmatched scale, financial stability and sustainability.
“We are hugely excited about the transformational growth opportunity created by the powerful combination of the global film and media services business of Reliance MediaWorks 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.
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, the Harry Potter franchise and Avatar, just to name a few. Equally within India, the PFL and RMW combination will integrate services to the Bollywood industry from equipment rental and shooting stages upto final digital distribution – a true one stop service.
The combined group will also have the world’s first hybrid cloud-enabled Media ERP platform, Clear, which virtualises 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 realising new monetization opportunities.
“We are very pleased to combine our global film and media services business with Prime Focus,” Reliance MediaWorks CEO Venkatesh Roddam expounds. “This is a natural and synergistic combination that will optimise resources, and create enhanced value and new opportunities for all stakeholders, including customers in India and overseas, and our dedicated team of people.”
The combination will result in the immediate extension of Prime Focus’ infrastructure across India, UK and North America including inter alia a total of one million sq. ft. of facilities including studio facilities in Film City, Mumbai; 30 per cent 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 among others; 100 per cent ownership of Los Angeles-based digital film restoration firm, Lowry Digital, an Oscar winner for Scientific and Technical Achievement in 2012.
Ernst & Young India was the exclusive advisor to Reliance MediaWorks for the transaction, and Centrum Capital was the exclusive advisor to Prime Focus.
The completion of the transaction is subject to certain conditions precedent as is customary, including applicable regulatory and other approvals. Accordingly, there can be no certainty at this stage that the transaction will be consummated as envisaged.
