DNEG, the Academy Award winner for visual special effects in films like “Tenet” and “Blade Runner 2049,” is going public in a SPAC merger.
The London company definitively agreed to merge with Sports Ventures Acquisition (AKIC) , aiming to trade on Nasdaq.
DNEG provides technology-enabled visual effects, known as VFX, to Hollywood studios, streaming services and production companies worldwide.
The other four films for which the company has won the Best Visual Effects Oscar are “First Man,” “Ex Machina,” “Interstellar” and “Inception.”
The deal enables DNEG “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,” Chairman and Chief Executive Namit Malhotra said in a statement.
DNEG estimates that for fiscal 2022 ending March 31, it will post adjusted earnings before interest, taxes, depreciation and amortization of $100 million on $400 million of revenue. The order book and pipeline at Sept. 30, 2021, totaled $731 million.
The enterprise value of the combined company is estimated at $1.7 billion. The current holders of DNEG will at closing retain 71% of the new company.
To fund the new company’s operations, investors have committed to buy $168 million of common stock at $10 a share in what’s called a PIPE, or private investment in public equity. Add to that $230 million of cash held in Sports Ventures’ trust account.
Both companies’ boards have approved the terms, and the companies expect to close the deal in the first half, subject to a vote of Sports Ventures holders and other conditions.
SPACs, or blank-check companies, are formed for the express purpose of finding and merging with an operating partner. The idea is to speed the operating company to the public markets and avoid the extended process of a traditional initial public offering.