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Pentamedia plans $100 m acquisitions - Views on News from Equitymaster
Pentamedia Graphics (formerly Pentafour Software) is planning $100 m acquisitions in the USA and Japan. The plan is to acquire companies with specialisation in the area of animation films, pre-and-post production and special effects area.
Pentafour specialises in 2D/3D animation, special effects for the film and broadcast industry, multimedia based IT solutions and computer business tutorials (CBT). The company has executed various 2D/3D animation projects for large US companies like Funimation Productions (for Cyboar), Improvision Corp (Sinbad) and Rich Animation (King and I).
The money that is to be used to fund the acquisitions is a part of the US$205 million that Pentamedia Graphics has to receive from Pentasoft Technologies after the transfer of the business software division of the Pentamedia Graphics.
Pentasoft Technologies had recently made a private placement of 15 million shares so that it could pay Pentamedia with a higher cash component than the recommended ratio of 30% of the issue proceeds in cash.
If the planned acquisitions were to go through, the shareholders of Pentamedia Graphics would definitely gain depending on the price–value equation of the acquisition itself. There are vast difference in rates for animation jobs per minute of screen time charged by the US studios vis-à-vis their Indian counterparts. (In the US rates range anywhere between $ 5,000 and $ 7,000 per minute of screen time vs. around $2000 per minute charged by Indian studios.)
Also with software and media valautions touching dizzy heights in the Indian markets Indian companies too are willing to pay decent prices based mainly on their current market capitalisations.
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