APN News

  • Friday, May, 2022| Today's Market | Current Time: 02:52:32
    • DNEG, a high-growth, technology-enabled visual effects and animation company executing ground-breaking, award-winning work for the world’s largest content creators, enters into business combination agreement with Sports Ventures Acquisition Corp. (Nasdaq: AKIC)
    • Proven business model with historical profitability; DNEG projects approximately $400 million in revenue and adjusted EBITDA of $100 million for its fiscal year ending March 31, 2022 (FY2022)
    • Long-term creative relationships lead to highly visible, recurring revenue streams, including approximately $731 million in order book and pipeline for FY2022 and beyond as of September 30, 2021
    • Substantial opportunity as a public company to further accelerate DNEG’s growth by expanding capacity and talent, entering new geographies and business segments (such as gaming and content creation), and pursuing accretive acquisitions and partnerships
    • The transaction implies a combined company enterprise value of approximately $1.7 billion
    • DNEG expects to receive approximately $400 million in gross transaction proceeds, including a fully committed $168 million common stock PIPE at a purchase price of $10 per share from leading investors including affiliates of Sports Ventures, Novator Capital Limited, affiliates of Fairfax Financial and Arbor Financial
    • An affiliate of Sports Ventures has agreed to backstop a portion of the $350 million minimum cash condition, subject to limitations

    DNEG (“DNEG” or “the Company”), a leading technology-enabled visual effects and animation company for the creation of feature film, television and multiplatform content, and Sports Ventures Acquisition Corp. (“Sports Ventures”) (Nasdaq: AKIC), a publicly-traded special purpose acquisition company, announced today they have entered into a definitive business combination agreement that will result in DNEG becoming a public company. Upon closing of the transaction, the combined company will be renamed DNEG and it is expected that its ordinary shares will be listed on the Nasdaq. The combined company will be led by Namit Malhotra, DNEG’s Chairman and Chief Executive Officer.

    DNEG is a leading technology-enabled visual effects (VFX) and animation company for Hollywood studios, streaming services and production companies worldwide, with operations based in North America (Los Angeles, Montréal, Toronto and Vancouver), Europe (London) and Asia (Bangalore, Chandigarh, Chennai and Mumbai). With more than 20 years of industry experience, DNEG has been awarded six out of the last ten Academy Awards® for ‘Best Visual Effects.’ Formed through the 2014 merger of Prime Focus (founded in 1997) and Double Negative (founded in 1998), DNEG has focused historically on building close working relationships with filmmakers.

    DNEG is positioned to be a true, global media powerhouse, with its fast-growing visual effects and animation businesses and significant opportunity to expand into new geographic markets, as well as adjacent products such as gaming, further accelerating its lead in visual effects and animation.

    Investment Highlights

    • DNEG benefits from massive content creation industry tailwinds across the globe
    • Long-term and well-established relationships with the world’s largest content creators, such as major Hollywood studios, production companies and streaming services, all of which have increasing demand
    • Highly visible, recurring revenue streams coupled with an integrated global workflow drives strong profitability
    • Multiple avenues for growth, including increased capacity, strategic M&A, emerging markets, gaming, and other adjacencies
    • Substantial barriers to entry from cutting edge technology infrastructure and global workforce at scale
    • DNEG is led by a visionary, creative, and entrepreneurial management team with a proven history of success

    Management Commentary

     DNEG Chairman and CEO Namit Malhotra said: “As we take the next logical step in our evolution, partnering with Sports Ventures on the road to becoming a publicly traded company, I would like to thank and celebrate our talented teams across the globe. Every day, they come together to create incredible new worlds for our storytelling partners, raising the bar for every project that we deliver. This transaction creates long-term stability for our teams while also allowing us to exploit the tailwinds in the media and entertainment industry and the explosion in demand for content, which are huge growth drivers for our company. I am excited to take the best of everything that makes our company so successful and to use it as a platform on which to build and innovate further. Leveraging our leading technology stack, DNEG is already making great strides into new growth areas such as gaming and content creation partnerships, and we are perfectly positioned to exploit massive new opportunities in the metaverse and the convergence of all forms of content creation.”

    Alan Kestenbaum, Chief Executive Officer and Chairman of the Board of Sports Ventures, said, “As a recognized worldwide VFX and animation industry leader, DNEG has a huge opportunity to capitalize on rapidly growing demand from Hollywood studios, production companies and streaming services. The sterling reputation that Namit and his exceptional team at DNEG have built is reflected not only in the awards they’ve won, but in the deep and longstanding relationships the company holds with the world’s largest content creators. The opportunity for expansion into new markets, such as gaming and the metaverse, as well as new markets for its core VFX and animation services, offers tremendous growth potential. We could not be more pleased to partner with DNEG and Namit’s team and look forward to our future together, as we grow the company and provide exceptional returns to our shareholders.”

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