Sports Venture Acquisition Corp. (AKIC) Terminates DNEG Deal
Sports Venture (NASDAQ:AKIC) announced this morning that it has mutually terminated its combination agreement with technology-enabled visual effects and animation company DNEG.
Similar to a handful of other terminations we’ve seen, the parties decided to terminate the deal due to the headwinds in the SPAC market and general market volatility. The press release also cited “other factors” as part of the reason, but did not disclose further details. DNEG paid a $1.5 million fee to Sports Venture’s sponsor in connection with the termination.
The news comes just days after DNEG announced its highest-ever revenue growth and a record pipeline of new business reflecting rising demand for its visual effects and animation services. For the full-year ended March 31, 2022, DNEG generated revenue of $409.3 million, net income of $39.3 million and adjusted EBITDA of $100.6 million, equating to YoY growth of 33.5%, 214.7% and 22.4%, respectively. The company recently signed a new multiyear agreement to expand its provision of visual effects and virtual production services for Netflix (NASDAQ:NFLX) series and feature programming through 2025.
Sports Venture was required to maintain at least $350 million in cash available through its trust and PIPE proceeds in order for the deal to close. It initially announced a $168 million PIPE as well as $325 million in senior debt and a $125 million revolving credit facility.
But, with a deadline of January 8, 2023, the SPAC intends to continue in its efforts to identify a prospective target business for an initial business combination subject to market conditions and timing. Sports Venture raised $200 million at IPO on January 5, 2021 and initially aimed to combine with a sports team, media rights or content platform or an entertainment studio. The SPAC is led by Chairman and CEO Alan Kestenbaum alongside President and CFO Robert Tilliss and COO Daniel Strauss.
The current SPAC and equity market conditions are still creating a challenging environment for SPACs and IPOs alike, making Sports Venture’s deal the 25th to terminate this year, and the second this week. The SPAC initially announced its $1.7 billion combination with DNEG earlier this year on January 25. London-based DNEG studios provide a full suite of visual effects and animation services to studios from its network of creative centers with 6,700 employees on three continents including recent films “the Matrix: Resurrections” and “Ghostbusters Afterlife”.