Visual effects firm DNEG, which has worked on projects like Stranger Things and Knives Out as well as launching an animation division, and merger partner Sports Ventures Acquisition Corp. have bailed on their plans to come together.
Since the merger was announced last January, market conditions have deteriorated for SPAC firms like Sports Ventures, which is led by Alan Kestenbaum, a minority owner of the NFL’s Atlanta Falcons. A flurry of SPAC (or “blank check”) deals were made in 2020 and 2021, a number of them in the media space, but the odds have shifted and many have unraveled.
A press release described the decision to call off the merger as a mutual one and said it was “a result of current unfavorable SPAC market conditions and other factors.”
As result of the decision to call off the deal, DNEG paid a termination fee of $1.5 million, according to an SEC filing.
DNEG CEO Namit Malhotra said he remains optimistic despite the transaction’s demise. “Our strong pipeline reflects the significant demand for our industry-leading visual effects and animation services,” he said. Last month, the company recently reupped with Netflix through 2025 in an extension worth $350 million. The company has worked on projects at the streaming leader like The School for Good and Evil. Other upcoming titles beyond Netflix include Black Adam, Aquaman and the Lost Kingdom and Haunted Mansion.
As a niche of the entertainment and technology business, visual effects has proven to be challenging over the years given its inherent volatility. The advent of streaming and the sharp increase in overall spending on film and TV projects have helped offset some of those historical complications, however.
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