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Prime Focus World, Double Negative merger to create visual effects behemoth

MUMBAI: Prime Focus World (PFW), the creative services subsidiary of Prime Focus Ltd, and Double Negative (DNeg) have agreed to merge to create the world’s largest independent visual effects, animation and 3D conversion services company serving the Hollywood film industry.

Alex HopeThe combined entity will be led by DNeg managing director Alex Hope and CEO Matthew Holben, both of whom will be in the board. Prime Focus founder Namit Malhotra will be board chairman of the new company.

While DNeg will run visual effects, PFW will handle 3D conversion and animation. London-based DNeg, established in 1998, is Europe’s largest independent VFX house with honours including an Academy Award (for ‘Inception’) and two BAFTAs (for ‘Inception’ and ‘Harry Potter and the Deathly Hallows, Part 2’).

Elated by the prize scalp, Malhotra said, “This is a transformational event—both for the companies involved and for the industry.”

Namit MalhotraHe went on to add, “Prime Focus has proven over the last five years the undeniable benefits of global collaboration: the flexibility of working in different time zones; the coming together of creative talent from across the globe; and the ability to leverage tax incentives. We can now bring this together with Double Negative’s unquestionable creative excellence to build a truly formidable offering.”

The transaction is likely to be concluded in the coming weeks after securing customary approvals from the authorities. Centrum Capital acted as financial advisors to Prime Focus.

The PFW–DNeg merger deal is 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.

The new VFX business will trade under the ‘Double Negative’ brand. In addition to the existing creative talent at its London and Singapore facilities, DNeg will be opening in Vancouver by bringing key talent and technology besides having complete access to all production and technology infrastructure in India.

prime focus logo cover“We have ambitious plans to build on what we’ve achieved in VFX over the last 15 years,” said DNeg’s CEO and MD. “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.”

For PFL, the deal is a win-win situation. The company will not only earn more than revenues, but the merger also puts the company on an accelerated growth path.

Given the combined order book of $150 million (Rs 900 crore), the company will be in a strong position to sustain growth, generate free cash flows, which, in turn, will help pare down debt by 30–40 per cent over the next four to six quarters and offer significant value to its stakeholders.

PFW’s successful and market-leading stereo 3D conversion offering and fast-growing animation business will be unaffected by the merger. With over 4,000 team members working across the US, UK, Canada, China and India, PFW’s award-winning stereo conversion process has been used on widely acclaimed films such as Academy Award winners ‘Gravity’, ‘The Wizard of Oz’ and ‘The Last Emperor’, as well as some of the highest grossing films of all time, including ‘Harry Potter and the Deathly Hallows: Part 2’, ‘Transformers: Dark of the Moon’ and ‘Star Wars Episode I: The Phantom Menace’, ‘The Amazing Spiderman 2’ and ‘Noah’.

Double_Neagtive_logoMalhotra added, “Our business proposition is already recognised in other industries. 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, while 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.”

Both PFW and DNeg have a power-packed summer line-up. PFW kick-started the season with its work on ‘Maleficent’ and ‘Edge of Tomorrow’. It is also the lead conversion house and a VFX provider for ‘Transformers: Age of Extinction’ and the exclusive stereo VFX partner for ‘Sin City: A Dame to Kill For’. The company is involved in almost half of all releases from the mainstream studios this summer.

DNeg has delivered stunning VFX for high-profile blockbusters such as ‘Godzilla’, ‘Interstellar’, ‘Jupiter Ascending’, ‘Exodus: Gods and Kings’ and ‘Hercules’, to name just a few.