CATALIST-LISTED film producer and investor Spackman Entertainment Group is looking to buy the entire stake in South Korean film production company, Simplex Films, for S$3.3 million in new Spackman shares.
In a bourse filing on Monday morning, Spackman said it had entered into a sale and purchase agreement with four independent third parties to acquire a 100 per cent interest in Hong Kong-incorporated Simplex Films Limited (SFL).
SFL wholly owns South Korea-founded film production firm Simplex Films Co., Ltd, which is headed by veteran Korean producer, Lim Ji-young.
The total purchase consideration will be 165 million new shares in Spackman, at two Singapore cents apiece. This works out to a price tag of around S$3.3 million.
The issue price of two cents represents a premium of 17.6 per cent to the stock's volume weighted average price of 1.7 Singapore cents per share based on trades done on July 12.
Spackman said the purchase price was arrived at after arm’s length negotiations and after reviewing the average of Spackman’s past one month’s volume weighted average price of about 1.8 Singapore cents and taking into account, among other things, SFL’s unaudited net profit before tax of 72.3 million South Korean won (S$83,743) for the period from Jan 1 to May 31, 2019.
The new Spackman shares, when allotted and issued, will represent about 13.8 per cent of the enlarged share capital upon completion of the acquisition.
Spackman said the proposed acquisition is in line with its strategy of “aggressively” looking out for acquisitions that can add accretive value to the group’s existing film production business, and it will also allow the sharing of networks and resources.
The acquisition is subject to conditions precedents such as the veracity of warranty, completion of Spackman’s due-diligence exercise including the valuation of SFL, regulatory approvals, and the consent of the boards of directors of SFL and Spackman.
John Ko, chief executive officer of Spackman, said the proposed acquisition will expand Spackman’s annual film production capacity and have a positive contribution within this fiscal year from Simplex’s maiden film.
Simplex’s upcoming film, Jesters: The Game Changers, is a historical comedy starring Cho Jin-woong and Son Hyun-joo, and is set to be released in August this year in South Korea. Currently in the post-production stage, the film is distributed by Warner Bros Korea and directed by Kim Joo-ho.
Spackman said Simplex plans to produce films to be theatrically released and distributed in South Korea and overseas.
Simplex will first release its films in South Korea, and subsequently in post-theatrical markets such as cable television, broadcast television, Internet Protocol television (IPTV), video-on-demand, and home video or DVD.
Spackman said the proposed acquisition will enable the group to be “better positioned to invest in Simplex’s pipeline of high-quality films in terms of script and casting in order to seek higher returns as both a film producer and an investor”.
Simplex has the following tentative pipeline of films: A Bolt from the Blue, Irrevocable Promise, Our Superstar K, Happy Murder, Girl Crush, and Temptation. A Bolt from the Blue is scheduled to start production in 2019. It will be directed by Kim Ji-mok, and is a remake of a 2014 Japanese comedy drama.
Spackman is an entertainment production group founded by media investor Charles Spackman, with offices in Seoul and Singapore.
The company is primarily engaged in the independent development, production, presentation, and financing of theatrical motion pictures in South Korea. It also produces Korean television dramas.
In addition to its content business, Spackman invests in entertainment companies and film funds.
Last week, the company announced that its subsidiary, Zip Cinema, will start filming its next major film in the second half of 2019. The movie, Alone, is headlined by actor Yoo Ah-in and actress Park Shin-hye.