Rainmaker Entertainment Inc. is merging with YouTube giantFrederator Networks, the companies said Wednesday, in a transaction that gives the Vancouver-based animation studio a bigger stake in online content delivery with the latter firm’s multitude of channels.
At the same time, Rainmaker is acquiring Ezrin Hirsh Entertainment Inc., in a move that will see that company’s CEO Michael Hirsh take the reins of the entire company, which will be rebranded as Wow! Unlimited Media Inc.
The new company will carry a dual-share equity structure to comply with Canadian ownership requirements under broadcasting laws.
Rainmaker is financing the acquisitions with the issue of new shares — 83 million shares at 20 cents per share, valuing Frederator at $17 million, and 26 million shares at an implied value of $5.2 million for Ezrin Hirsh.
That is a substantial premium over the five cents per share Rainmaker equity was selling at on the TSX Venture exchange before the annoucement.
Rainmaker is also issuing an $11-million private placement of subscription units — with $6 million to be purchased by Frederator founder Fred Seibert — which buyers will also convert into equity to restructure $13.5 million in debt.
Proceeds from the financing will be used for “growth opportunities including future acquisitions and organic initiatives,” the companies said in a news release.
The aim is to create a “pure-play kids and youth entertainment” provider.
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