London-based DNEG, a visual effects and animation company for feature film, television and multiplatform content, and Sports Ventures Acquisition announced today a definitive business combination agreement. If approved, upon closing DNEG is expected to be listed on the Nasdaq.
With more than 20 years of industry experience, DNEG has been awarded six out of the last ten Academy Awards® for ‘Best Visual Effects,’ most recently the film Tenet.
The transaction implies an enterprise value of approximately $1.7 billion for the combined company, representing approximately 11.4x FY2023E (ending March 31, 2023) adjusted EBITDA. Current DNEG equity holders will retain approximately 71% ownership in DNEG and will, assuming no redemptions by Sports Ventures’ stockholders, roll 85% of their equity interests into the pro forma company.
Investors have committed to a $168 million PIPE, which is anchored by affiliates of Sports Ventures, Novator Capital Limited, affiliates of Fairfax Financial and Arbor Financial. Assuming no redemptions, approximately $230 million in cash currently held in Sports Ventures’ trust account, together with the approximately $168 million in PIPE investment proceeds (excluding transaction expenses) would be delivered to DNEG.
Contingent upon the closing of the proposed merger, DNEG will enter into new senior secured credit facilities, consisting of a $325 million term loan facility that will be fully drawn at closing, and a $125 million revolving credit facility. In the event of any redemptions by Sports Ventures stockholders, an affiliate of Sports Ventures has agreed to backstop a portion of the $350 million minimum cash condition, subject to limitations. Read more.
