The deal will help PVR eclipse rivals Inox and Big Cinemas, giving it access to Cinemaxs 138 screens in 39 properties. PVR, which currently has about 213 screens in 46 properties, will have a total of 87,493 seats with the deal. Inox has 256 screens, while Big Cinemas has 254 screens.
Gurgaon-based PVR said it would pay Rs 203.65 a share to the Kanakia family through its subsidiary Cine Hospitality. The offer price is 16% higher than Cinemaxs closing price of R175.50 on Tuesday. Shares of Cinemax were up 5% at R184.25, while those of PVR shot up 8% to R255.50 on Thursday on the BSE as investors welcomed the acquisition.
The company also said in a notice to the BSE that it plans to buy a 26% stake in Cinemax from public shareholders through an open offer.
PVR has also announced a preferential issue of equity of 1,06,25,205 shares at a price of R245 per share amounting to R260 crore to promoters, existing investor L Capital and new private equity investor Multiples Alternate Asset Management (Multiples). Under the preferential issue of equity shares in PVR, Multiples will invest an amount of approximately R153 crore, L Capital would invest R82.3 crore and promoters would invest R25 crore into PVR. Post the above dilution, both multiples private equity and L Capital would own 15.8% stake each in the company and the promoters will hold 32% stake, an official statement said.
Speaking on the occasion, Ajay Bijli, promoter of PVR, said, In order to achieve market leadership in Indian exhibition business, PVR has been on a rapid expansion mode both through organic as well as inorganic routes. Today, with the proposed acquisition of Cinemax, we hope to create the largest movie exhibition chain in India. Cinemax has a premium portfolio of multiplex screen across India and has been a market leader in western India. Together, we shall strive to create value for all the stakeholders while delivering international standard movie going experience to Indian audience.
On his part, Rasesh Kanakia, promoter of Cinemax, said, This transaction enables realisation of such benefits and would create significant value for all the shareholders of Cinemax. The deal will enable us to ensure greater focus on our real estate and hospitality businesses. He said the the deal with PVR was not only completed in record time but with a great deal of mutual faith and respect.
PVR revealed earlier this week that it was in talks with Cinemax over a potential stake buy, following recent media reports that said that the Kanakia family was looking to sell the chain to focus on their core real estate development business.
PVR has outlined plans to have 500 screens by 2015, as it looks to establish itself as the chief destination for movie-goers in the country.
Renuka Ramnath-led Multiples Alternate Asset Management manages $450 million and its recent investments include hi-drilling equipment maker Sara Sae, Indian Energy Exchange, Cholamandalam Investment and Finance Company and South Indian Bank.
The news marks the latest major deal in the multiplex space since Inox Leisure bought a 43% stake in Fame India, which owns the Fame chain.