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In a move that will create the largest multiplex chain in the country, PVR Ltd and INOX Leisure announced a deal to merge their operations. The boards of the two companies on Sunday approved an all-stock amalgamation of INOX with PVR to form a new combined entity called PVR INOX Ltd that will operate 1,546 screens across 341 properties.
As per the agreement, INOX will merge with PVR in a share swap ratio of 3 shares of PVR for 10 shares of INOX. The merger is subject to approval of the shareholders, stock exchanges, SEBI and other regulatory approvals.
Deal terms
Post the merger, INOX’s promoters will own 16.66 per cent stake while PVR Promoters will have 10.62 per cent stake in the combined entity. Promoters of INOX will become co-promoters in the merged entity along with the existing promoters of PVR.
“Upon effectiveness of the scheme, the board of directors of the merged company would be re-constituted with total board strength of 10 members and both the promoter families having equal representation on the Board with 2 board seats each,” the companies added.
PVR’s Ajay Bijli will be the Managing Director and Sanjeev Kumar would be appointed as the Executive Director. Meanwhile, Inox’s Pavan Kumar Jain will be appointed as the Non-Executive Chairman of the Board and Siddharth Jain as Non-Executive Non-Independent Director in the combined entity.
Ajay Bijli, Chairman and Managing Director of PVR, told BusinessLine, the partnership will create an, even more, stronger entity that will leverage significant complementary strengths and efficiencies to fight the onslaught of the OTT platforms. “The film exhibition sector has been one of the worst impacted sectors due to the pandemic. Consumption of content has become omni-channel and we do have some very deep-pocketed behemoths in the form of OTT platforms. Although post the second wave consumers have flocked back to the cinemas and so we think by coming together we will ensure that the exhibition industry continues to propel forward and grow,” he said.
“As we head into the industry’s revival amidst headwinds, this decisive partnership would bring in enhanced productivity through scale, a deeper reach in newer markets, and numerous cost optimization opportunities kickstarting the reinvestment cycle,” said Siddharth Jain, Director – INOX Leisure Ltd. The merger is likely to take six to nine months for completion, he added.
Bijli said the combined entity could look at adding close to 200 screens organically per year as both PVR and Inox were adding 80-90 screens each annually in the pre-pandemic days. “On a pan-India level, India is still grossly under-screened and both the partners see strong opportunities to expand our presence to new catchements, especially in semi-urban and rural areas,” Bijli added.
PVR Inox
The companies said that branding of existing screens will continue as PVR and INOX respectively while new cinemas post the merger will be branded as PVR Inox. “The focus right now for the maximum use of the capital will be on business growth,” added Jain.
Analysts said that the merger is not likely to require CCI approval. Abneesh Roy, Executive Director-Institutional Equities, Edelweiss Securities said that the merged entity will have significantly higher bargaining power in terms of rentals, content deals besides savings in terms of F&B sourcing and marketing spends.
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