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VFX and Animation Giant DNEG to Go Public With $1.7 Billion SPAC Valuation

DNEG chairman and CEO Namit Malhotra will lead the combined company

DNEG, the visual effects and animation company behind everything from the new “Venom” sequel to multiple Marvel movies and the Tom Hanks war epic “Greyhound,” to name a few, is going public with an SPAC deal that will value the company at $1.7 billion.

DNEG formed the agreement Tuesday with the SPAC Sports Ventures Acquisition Corp. (Nasdaq: AKIC) that will result in the company going public. Once the transaction closes, ordinary shares will be listed on the Nasdaq and the combined company, renamed DNEG, will be led by Namit Malhotra, DNEG chairman and CEO.

DNEG projects approximately $400 million in revenue and adjusted earnings before interest, taxes, depreciation and amortization of $100 million for its fiscal year ending March 31, 2022. And the company projects approximately $731 million in order book and pipeline for fiscal year 2022 and beyond.

Going public will help the company pursue other goals in the gaming realm, the metaverse and their own content creation, as well as pursuing other acquisitions and partnerships.

“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,” Malhotra said in a statement. “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.”

“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,” said Alan Kestenbaum, CEO and chairman of the board of Sports Ventures. “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.”

DNEG has operations in Los Angeles, Montréal, Toronto, Vancouver, London and across Asia. The company was formed through the 2014 merger between Prime Focus in 1997 and Double Negative founded in 1998, and since then, DNEG’s team has won the Oscar for Best Visual Effects six out of the last 10 years.

DNEG says it expects to receive approximately $400 million in gross transaction proceeds, including a fully committed $168 million common stock PIPE (private investment in public equity) at a purchase price of $10 per share from investors Sports Ventures, Novator Capital Limited, affiliates of Fairfax Financial and Arbor Financial. And an affiliate of Sports Ventures has agreed to backstop a portion of the $350 million minimum cash condition, subject to limitations.