VFX Studio DNEG Nixes $1.7 Billion SPAC Deal, Citing ‘Market Volatility’
DNEG, a U.K.-based visual effects and animation house whose customers include Netflix and major Hollywood film studios, has called off plans to go public amid the broad global slump in financial markets.
In January, DNEG had announced plans to merge with Sports Ventures Acquisition Corp., a special purpose acquisition company (SPAC), in a deal valuing the company at $1.7 billion. The duo had previously expected that to close in the first half of 2022.
On Thursday, the companies announced the termination of the agreement as a result of “current unfavorable SPAC market conditions” and other factors. Sports Ventures said it will consider other acquisition opportunities, subject to market conditions and timing.
“Due to the headwinds in the SPAC marketplace and general market volatility, we have decided to terminate our SPAC process with Sports Ventures,” DNEG chairman and CEO Namit Malhotra said in a statement.
However, Malhotra added, “We feel incredibly optimistic about DNEG’s future and the company continues to demonstrate impressive financial results, with our highest-ever revenue growth announced earlier this week.” He pointed to the deal renewal DNEG announced last month with Netflix, under which the streamer expects to spend at least $350 million with the company through September 2025.
DNEG has worked with Netflix projects including “Stranger Things” Season 4; Rian Johnson’s “Knives Out 2”; fantasy action-dramas “The School for Good and Evil” and “Avatar: The Last Airbender”; origin story “The Witcher: Blood Origin”; and upcoming fantasy comedy-adventure “Slumberland” from director Francis Lawrence. In addition, DNEG Animation is providing animation services for the animated feature film “Nimona,” slated to be released by Netflix in 2023.
In 2021, the company won the visual effects Oscar and BAFTA awards for Christopher Nolan‘s “Tenet.” Other film and TV credits include “Dune,” “No Time to Die,” “The Matrix Resurrections,” “Ron’s Gone Wrong,” “The Flash,” “Sonic the Hedgehog 2,” “Jurassic World: Dominion,” “The Gilded Age,” “The Wheel of Time,” “Foundation,” “Ghostbusters: Afterlife” and “Zack Snyder’s Justice League.”
Malhotra had previously said DNEG planned to expand its capacity by up to 40% by year-end 2022, although it’s not clear whether that’s still in the cards.
DNEG was formed through the 2014 merger of Prime Focus (founded in 1997) and Double Negative (founded in 1998). The company has nearly 7,000 employees with worldwide offices and studios across North America (Los Angeles, Montréal, Toronto and Vancouver), Europe (London) and Asia (Bangalore, Chandigarh, Chennai and Mumbai).
(Pictured above: Sadie Sink in Netflix’s “Stranger Things 4”)
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