ContentFilm, Peace Arch deal collapses
EmptyLONDON -- U.K.-based sales and financier ContentFilm, listed here on the Alternative Investment Market, will not be sold to Canada's Peace Arch Entertainment, the British company said Thursday.
ContentFilm told the stock exchange that the Peace Arch deal has collapsed because of a decline in Peace Arch stock value, the turmoil in capital markets and delays in the completion of an audit at the Canadian company.
The pair signed a letter of intent in December, in which Peace Arch said it was mulling a $69 million bid for Content.
Content said Thursday that the decline in Peace Arch stock value has rendered "the proposed share exchange ratio unfavorable to CFL shareholders."
The British company also noted that it is experiencing continued positive growth in its business, particularly through its television rights division Fireworks International, which has acquired the library of Canadian pubcaster CBC.
ContentFilm told investors that "given the strong prospects for the company, shareholders' best interests would be served by the company remaining as an independent entity." It added that the company is off the market for the immediate future.
Peace Arch opened negotiations in the wake of major ContentFilm shareholder Syntek Capital's March 2007 announcement that it planned to sell its stake. According to ContentFilm, Syntek is no longer planning to offload its stake.
In making Thursday's announcement, ContentFilm CEO John Schmidt described the last year as "challenging" but said he is looking forward to the coming months and promised that management's focus will be on revenue growth and strategic acquisitions.
On another front, Schmidt said that the company's U.S. DVD distribution business, Allumination, is underperforming due to several factors including the U.S. economy and changes in studio's selling patterns.
Allumination was sold to Content by its founders, Jeff Sagansky and Kerry McCluggage, who became shareholders in Content as a result. Sagansky and McCluggage also are key players in Peace Arch, with Sagansky serving as the company's CEO.