SPACKMAN Entertainment Group Limited, a South Korean entertainment production group, has entered into a sale and purchase agreement with independent third parties to acquire talent management agency, Constellation Agency for S$16.6 million.
To acquire Constellation, Spackman intends to issue about 144.8 million new shares at S$0.115 apiece. The purchase consideration of S$16.6 million takes into account Constellation's unaudited net profit of US$1.2 million, and its unaudited net asset value of US$3.6 million as at Nov 30, 2017, Spackman said.
Constellation is primarily involved in the business of representing and advising South Korean artists in global markets, including South-east Asia and the US. It also owns marketing solutions provider, The P Factory; and talent management agency, Platform Media Group.
The group is of the view that this acquisition will allow it to leverage Constellation's unique marketing expertise and talent management platform to deliver integrated content production. In addition, it believes that this is a "strategic fit to the company's existing operation" as it diversifies.
Separately, the group also announced that it has entered into a share swop agreement with an existing shareholder, who is also the vendor of Spackman Entertainment's associated company, Spackman Media Group Limited.
Under the deal, the group will purchase 920,000 shares of Spackman Media at US$3 a share for US$2.76 million. These represent 3.01 per cent of the equity interest in Spackman Media. Upon completion of the agreement, the group's shareholding in Spackman Media will increase from 29.12 per cent to 32.13 per cent.
To fulfill this purchase consideration, the group will issue about 32.4 million new shares, at an issue price of S$0.115 a share, valued at US$2.76 million. The issue price is at a premium of 23.7 per cent to the group's volume-weighted average price of S$0.093 as at Dec 21. Upon completion of the deal, the new shares will represent 5.92 per cent of the group's enlarged share capital, comprising 547.9 million shares.
Spackman Media is incorporated in Hong Kong and together with its subsidiaries, is collectively one of the largest entertainment talent agencies in South Korea in terms of the artistes under its management. For the nine months ended Sept 30, 2017, its profit before tax is US$221,519; and its net asset value is US$12.1 million, based on unaudited financial statements.
The group is optimistic about the growth of Spackman Media and believes that it will help "unlock higher value for the company's shareholders through its talent management business".
The allotment of new shares will not result in any transfer of controlling interest in the company, as Spackman Equities Group Inc will remain as the sole controlling shareholder of the group after the proposed acquisition with a 21.51 per cent stake.
Following the share swop and the Constellation acquisition, the vendor who entered into the share swop agreement will hold 4.68 per cent of the group. No other details have been provided about this vendor, except that "none of the directors, the controlling shareholders of the company, or their associates are related to the vendor".