Prime Focus’ creative services subsidiary Prime Focus World and VFX house Double Negative have reached an agreement to merge, marking a major shift in the global visual effects market.
In an unprecedented move, global media and entertainment industry services leader Prime Focus Limited (BSE code: 532748) has announced the merger of its creative services subsidiary Prime Focus World (PFW) and Double Negative, one of the largest visual effects services providers to the global film industry. The agreement will create what is indisputably the world’s largest independent VFX, stereo conversion and Animation Company serving the Hollywood film industry.
With the announcement of merge the roadmap is already ahead subject to customary closing conditions and is expected to close in July.
London-based Double Negative is one of the world’s top vfx studios, founded in 1998 with a team of just 30, has grown to become one of the industry's success stories and is now Europe's largest independent provider of visual effects for Films got recognition from the Visual Effects Society (for Inception and Sherlock Holmes), BAFTA (for Inception and Harry Potter and the Deathly Hallows Part 2) and the Academy® Awards (for Inception). Their recent work includes Transcendence and Godzilla. Shows currently in production include Jupiter Ascending, Interstellar, In The Heart of the Sea, Book of Exodus, Hercules, Hunger Games: Mockingjay, Avengers: Age of Ultron, Terminator: Genesis, Insurgent, Grimsby, and Ant-Man.
A Still from Film Gravity
Prime Focus World, a subsidiary of Prime Focus Limited, provides visual effects, 3D conversion and animation services to major media and entertainment companies. PFW has brought its expertise to many wide release Hollywood films including Transformers: Age of Extinction, Gravity, Maleficent, Edge of Tomorrow, Noah, White House Down, The Wizard of Oz, The Great Gatsby, World War Z, Men in Black 3, Star Wars: Episode I, II & III, Dredd 3D, Total Recall, Harry Potter and the Deathly Hallows: Part 2, Transformers: Dark of the Moon and Avatar. Shows currently in production include Sin City: A Dame To Kill For, Teenage Mutant Ninja Turtles, The Expendables 3, Kingsmen: The Secret Service, Mortdecai and Hercules.
Prime Focus World and Double Negative have worked together as co-lead vendors on a number of marquee Hollywood projects. They had the opportunity to closely watch each other perform, deliver and grow through the years. There is a great amount of mutual admiration, regard and trust in relationship across levels within both organizations.
Both Prime Focus World and Double Negative have a power packed summer line up. Prime Focus World kick started the season with its work on Maleficent and Edge of Tomorrow. It is also the lead conversion house and a VFX provider on Transformers: Age of Extinction and the exclusive stereo VFX partner on Sin City: A Dame To Kill For. Prime Focus World is involved in almost half of all releases from the mainstream studios this summer where as Double Negative has delivered stunning visual effects for high-profile blockbusters such as Godzilla, Christopher Nolan’s Interstellar, Jupiter Ascending from Andy and Lana Wachowski, Ridley Scott’s Exodus: Gods and Kings, and Brett Ratner’s Hercules, among others.
As far as VFX Industry is concerned, Hollywood VFX is a 2.5 billion dollar opportunity. Double Negative is Europe’s largest independent VFX house and one of the most acclaimed in the world. So the focus is certainly on growing VFX business and market share.
The merger makes Double Negative a global VFX company that can leverage the best of creative talent, tax subsidies (Vancouver, London), and scale (4000 staff across US, UK, Canada, China and India).
For Prime Focus the deal offers a clear path to growth where revenues would have more than doubled. With a combined order book of ~US$ 150 mn (INR 900 cr), the company will be in a strong position to sustain growth, generate free cash flows, pare down debt by ~30-40% over the next 4-6 quarters and offer significant value to its stakeholders.
“Our business proposition is already recognized in other industries,” concluded Namit Malhotra who will return to Prime Focus Limited as Executive Chairman of the Board and Group CEO. “The delivery of unmatched creative design and development by the best that the West has to offer, supplemented by the unbeatable infrastructure, scale and cost efficiency of the East. We are establishing a new and sustainable direction for our company, whilst ensuring both growth for our investors and huge financial benefits for our clients. This is a substantive validation of Prime Focus’ phenomenal growth story, and marks the beginning of a new trajectory for the company.”
The new VFX business, which will trade under the ‘Double Negative’ brand, will be led by Double Negative’s current management team of Alex Hope (Managing Director) and Matthew Holben (CEO). In addition to the existing creative talent at its London and Singapore facilities, Double Negative will be opening in Vancouver by bringing key talent and technology besides having complete access to all production and technology infrastructure in India.
“We have ambitious plans to build on what we’ve achieved in VFX over the last 15 years,” said Double Negative’s management team of Matthew Holben (CEO) and Alex Hope (Managing Director). “This deal allows Double Negative to develop into a truly global operation that provides great work for our clients and great opportunities for our staff.”
The holding structure for the new entity will be a 100% subsidiary of Prime Focus World which is the creative services subsidiary of BSE/NSE listed Prime Focus Limited.
The transaction will be supported by Standard Chartered Private Equity, Macquarie Capital and AID Capital Partners, all existing investors in Prime Focus entities, and existing bankers across the Group, Centrum Capital. The existing investors will be providing equity and debt financing for the transaction.
This transformative deal is definitely going to takes Prime Focus World to the Number 1 position in the world as an integrated creative services provider to Hollywood. On the technology side, PFT recently acquired DAX to fuel its strategic expansion in North American market.