Eros And STX Close Merger, Plan New York Stock Exchange Debut In September, Eye $1B In Revenue By 2022

STX Entertainment; Eros International

Eros International and STX Corp. have formally closed their merger and said the combined firm plans a listing on the New York Stock Exchange in September.

The combined entity, which blends the film and TV operations of large-scale indie STX with the production and streaming assets of India-based Eros, will trade under the symbol ESXI. Eros STX Global Corp. will be based in the Isle of Man and headquartered in Burbank and Mumbai. The official closing announcement called the new firm a “powerhouse between East and West.”

New and existing investors include TPG, Tencent, Hony Capital and Liberty Global.

STX, launched by Robert Simonds nearly a decade ago with blue-chip backers, including several Chinese firms, has tasted breakout success with Bad Moms and Hustlers, but as an independent company it has also had missteps. It had to abandon a quest for a public offering on the Hong Kong Stock Exchange when market conditions grew choppy last year.

Eros, founded in 1977, is a multi-faceted operation known as a leading producer and distributor in India. Its portfolio includes the Eros Now streaming service and it has production output deals with Netflix and Amazon. It is known in the U.S. for its specialty film releases but is a much more familiar name in Southeast Asia and other international regions.

In April, the companies announced their intention to combine. On Tuesday, they acknowledged the adverse climate in offering an initial outlook for their business. They project $1 billion in revenue by calendar year 2022, but that’s only if the global economy and the media and entertainment landscape “return to a level of normalcy by late 2020.” On a pro forma basis, the merged entity had about $600 million in calendar 2019.

Eros STX benefits from $110 million of incremental equity, with an additional $15 million to be completed within the next 90 days, from new and existing global investors including TPG, Tencent, Hony Capital and Liberty Global. All of these investors come with a strong track record in media and technology investments, and will partner with Eros STX over the long-term to pursue strategic investments in key growth areas including global distribution and OTT content.

In addition to a $125 million equity investment in the new entity, the company also has a revamped $350 million credit facility led by JP Morgan. On a pro forma basis, as of July 28, 2020, Eros STX had net debt of about $254 million, with total cash on hand of $144 million. It expects about $50 million in merger-related cost savings, with STX due to generate more than $300 million in “highly predictable” future revenue.

The company’s board of directors will be headed by executive co-chairman Kishore Lulla and Simonds, who is co-chairman and CEO.

The rest of the management team includes CFO Andrew Warren, who held the same role at STX. Rishika Lulla Singh, who has been chairman of Eros Digital, and Noah Fogelson, formerly STX’s EVP of Corporate Strategy and General Counsel, will each be co-presidents. Former Eros CFO Prem Parameswaran will head corporate strategy. Adam Fogelson, the longtime former Universal exec who has spearheaded STX’s U.S.-based film operations, will remain chairman of the STX Motion Pictures Group. Pradeep Dwivedi will continue as CEO-India.

The company is planning an Eros STX brand and website launch in September and also will host a virtual investor day later this year to provide strategic and financial guidance and projections.

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