The multi-layered deal includes the infusion of Rs 120 crore by Reliance MediaWorks in Prime Focus for a 30.2 percent stake, while existing promoters of Prime Focus would also pump in a similar amount.
Reliance Capital on Wednesday announced the merger of its global film and media services business with Prime Focus to create an entity with a combined turnover of over Rs 1,800 crore.
The multi-layered deal includes the infusion of Rs 120 crore by Reliance MediaWorks in Prime Focus for a 30.2 percent stake, while existing promoters of Prime Focus would also pump in a similar amount.
Prime Focus promoters as well as Reliance MediaWorks will also launch an open offer for a further 26 percent jointly.
Also Read: Robust demand for 3D to continue in FY15: Prime Focus
Reliance MediaWorks was recently delisted from the stock exchanges and has been part of the investment portfolio of Reliance Capital, the financial services arm of Anil Ambani-led Reliance Group.
However, Reliance Capital has now decided to unlock value from its investments in sectors other than financial services.
In a joint statement, the two companies said the deal would create the world's largest media services power house, which already has an order pipeline of Rs 2,000 crore, over 5,500 employees and operations in the US, UK, Canada, China and Singapore, besides India.
Prime Focus chief Namit Malhotra will head the combined entity while its current promoters will have a 33.5 percent stake after the transaction.
Prime Focus said it would use the deal proceeds to fund its recent acquisition of US-based Double Negative, an Academy Award-winning visual effects studio.
"We are hugely excited about the transformational growth opportunity created by the powerful combination of the global film and media services business of Reliance MediaWorks and Prime Focus," said Amitabh Jhunjhunwala, Group Managing Director of Reliance Group.
Some blockbusters handled by the two entities include The Dark Knight trilogy, 'Transformers 4', 'Inception' and 'Gravity'.
Shares of Reliance Capital rose marginally to close at Rs 655.75, while those of Prime Focus fell 0.3 per cent to end at Rs 54.65, on the BSE.
The open offer for the purchase of 26 per cent from public shareholders of Prime Focus would be made at Rs 52 per share, the price at which Reliance MediaWorks and Prime Focus promoters are being issued shares through a preferential allotment.
Rel Capital stock price
On July 02, 2014, Reliance Capital closed at Rs 655.75, up Rs 2.05, or 0.31 percent. The 52-week high of the share was Rs 668.40 and the 52-week low was Rs 290.00.
The company's trailing 12-month (TTM) EPS was at Rs 16.62 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 39.46. The latest book value of the company is Rs 467.67 per share. At current value, the price-to-book value of the company is 1.40.
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