Mumbai: Reliance MediaWorks Ltd (RMW), the media and entertainment arm of Reliance Group, will merge its global film and media services business with Prime Focus Ltd, the firms announced in a statement on Wednesday.

RMW and the promoters of Prime Focus will infuse 120 crore each ( 52 a share) through a preferential allotment of shares into the merged business, the statement said.

As part of the deal, the India and overseas operations of RMW’s film and media services business will merge with Prime Focus through a slump sale, creating the largest media services group in the world with 5,500 people working across 20 locations.

The merger will enable Prime Focus—which sells end-to-end creative and technical services to the film, broadcast, advertising and media industries—to expand into markets such as the UK, North America and India. It will also gain 100% ownership of Los Angeles-based digital film restoration firm Lowry Digital and 30% ownership in Hollywood visual effects company Digital Domain.

Namit Malhotra will continue to lead the firm as executive chairman and global chief executive of Prime Focus, the statement said.

The equity infusion will be used to fund Prime Focus’s acquisition of Double Negative, a European visual effects firm. The deal is likely to be completed in the next three weeks.

The promoters of Prime Focus and RMW simultaneously also announced the mandatory open offer in Prime Focus, to the extent of 26% of the fully diluted share capital and 52 per share, in compliance with applicable rules and regulations. Post the transaction, the fully diluted shareholding of the promoters of Prime Focus will be at 33.5%, while that of RMW will be at 30.2%.

“This is a natural and synergistic combination that will optimize resources, and create enhanced value and new opportunities for all stakeholders and our dedicated team of people," said Venkatesh Roddam, chief executive, Reliance MediaWorks.

In a related development, Sam Ghosh, chief executive of Reliance Capital, the parent company of Reliance MediaWorks, said the proposed Prime Focus deal marks a significant step forward in Reliance Capital’s strategy of unlocking value from its investments in sectors other than financial services.

“This strategy will free up management bandwidth and resources in Reliance Capital, enabling us to singularly focus on our core businesses of asset management, life and non-life insurance, broking and distribution, commercial finance and related sectors in financial services," Ghosh said.

Ghosh indicated that similar discussions are underway in relation to unlocking of value from other investments made by Reliance Capital in areas outside financial services, “and further announcements will be made at the appropriate stage".

RMW was delisted from the bourses after its board approved the delisting offer on 20 January which was later cleared by the shareholders.

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