Computer Film Holdings (CFC), which has offices in London and Hollywood, will merge with Megalomedia's Framestore division. CFC has worked on 90 feature films in the US and Europe, including blockbusters such as Mission: Impossible, Braveheart and The Nutty Professor, starring Eddie Murphy.
A spokesman for Megalomedia said yesterday the company would fill-in with other acquisitions in the screen-based services sector. He said the merger would not result in any job losses.
Megalomedia, which is headed by Lord Saatchi and boasts Mick Jagger as a shareholder, has stakes in a number of new media ventures, including Cyberia Cafe and the Multimedia Corporation.
Last August, it acquired an 11.1 per cent share of Webmedia, a web site design outfit. Megalomedia joined the Alternative Investment Market in December 1995.
CFC had turnover of pounds 5.19m in the year to September, and profits of pounds 447,000.