By Nicholas Sokic

Blue Ant Media has entered into an agreement to go public via a reverse-takeover of fellow Toronto super-indie Boat Rocker Media.

The transaction is valued at approximately $106 million. Boat Rocker will buy all outstanding shares of Blue Ant, based on a share price of $2.25 per share, in exchange for subordinate voting shares in the listed business.

The company, run by CEO and co-founder Michael MacMillan (pictured), will list on the Toronto Stock Exchange as Blue Ant Media Corporation. Concurrently, Boat Rocker Media co-founders and co-executive chairmen Ivan Schneeberg and David Fortier and CEO John Young, acting as a new company labeled IDJCo under the deal, will buy out its studios business from Boat Rocker. This will be for approximately $18 million via a guaranteed promissory note from Fairfax Financial Holdings payable over six years, with an additional $1 million payable in the final year. Fairfax is a controlling shareholder in Boat Rocker and a significant shareholder in Blue Ant.

The transaction is expected to close in June.

The deal will allow Schneeberg, Fortier and Young to continue to carry on business as Boat Rocker while the Boat Rocker public company infrastructure, listing as well as its previously acquired prodcos Insight Productions, Jam Filled Entertainment and Proper Television are brought into Blue Ant.

“We will be more agile than ever, allowing us to move faster and lean in closer to projects we believe in,” said Schneeberg, Fortier and Young in a statement. “We will be better positioned to invest in amazing content and better able to ensure that the projects we are part of achieve their fullest potential, both in terms of entertainment value and worldwide sales.”

Boat Rocker completed its full acquisition of Insight in January, while Jam Filled was acquired in August 2016 and Proper Television in September 2017. According to a release, the three companies delivered $118 million in revenue based on unaudited results in the 2024 calendar year.

“Ideally [Blue Ant will be] holding on to some of the IP that they’re creating, so we can put it through our system and do direct sales with third parties, but also to help populate the programming on some of our international channels,” said MacMillan during an investor’s call on the reverse-takeover.

The rest of Boat Rocker’s scripted, unscripted and kids and family television production, distribution, brand and franchise management, creative and venture partnerships and content investment business will be sold to IDJCo. This includes Boat Rocker’s interest in and partnership with animation-focused Industrial Brothers prodco. The new Boat Rocker Studios will continue to operate from its offices in Toronto, London, L.A., New York City and Hong Kong.

Blue Ant will own about 73.5% of the new Blue Ant Media Corporation and Boat Rocker will take the rest.

Fairfax will acquire Boat Rocker’s near-5% interest in The Initial Group for approximately $17 million. Fairfax has also agreed to support the transaction via a $20 million backstop commitment, which would reduce Blue Ant’s ownership shares if completed.

“We believe that scale is important as global broadcasters and streamers seek to do more business with fewer partners,” said MacMillan. “An interconnected business model is a key differentiator versus competitors. Indeed, we may be closest to a small and simple version of a major American studio with a focus on unscripted programming and the determination to avoid significant leverage.”

As part of the transaction, Blue Ant will also receive $25.5 million as a minimum cash balance and working capital and a value assurance payment of up to $34.7 million related to the performances of Insight, Jam Filled and Proper Television as of the end of this year.

According to an investor presentation, the reverse-takeover and support from Fairfax will provide between $54 million to $89 million in cash for Blue Ant’s balance sheet. A planned equity raise in conjunction with the takeover would provide additional capital for further planned mergers and acquisitions.

The same presentation estimates Blue Ant Media Corporation would have a much larger revenue base at about $315 million. Comparatively, Blue Ant generated $196 million in revenues in its most recent fiscal year ending August 31, 2024, which, according to the company, is a 16% increase year-over-year. Post-takeover, the new business is expected to have approximately $37 million in net cash.

“The cash we were looking to raise would significantly increase our ability to accelerate M&A opportunities and take advantage of the current market conditions, opportunities which may not exist in a few years,” said MacMillan.

He also noted he expects an increase in service work for Blue Ant’s Canadian studios and discussed the possibility of using M&As and content library acquisitions to grow some of its other FAST channels.

MacMillan will remain CEO and current Blue Ant chair Brad Martin will be appointed chair of the board of directors. Other than Cineplex CEO Ellis Jacob, Boat Rocker’s board will resign on the closing of the transaction while retaining their equity in the new company.

“We believe our increased scale and profile as a public company will help us attract talent and new business partners, along with providing us access to a lower cost of capital,” said MacMillan.

This story was originally published on PlaybackOnline