The merger of leading film exhibition players PVR Ltd and INOX Leisure Ltd will add momentum to the business and all stakeholders will benefit from this consolidation in the sector which is expected to get required regulatory approvals in the next six-nine months, according to PVR Chairman and Managing Director Ajay Bijli.
He, however, said there is no agenda to renegotiate real estate and mall rentals as of now.
The exhibition sector has taken a huge beating during the pandemic and the film industry and mall owners need to stabilise from the pandemic impact, Bijli told CNBC-TV18.
In regulatory filings on Sunday, the companies announced that their boards have approved an all-stock amalgamation of INOX with PVR.
INOX shareholders will receive three shares in PVR for 10 shares of INOX.
After the merger, PVR’s promoters will have 10.62 per cent stake, while INOX promoters will have 16.66 per cent stake in the combined entity.
Bijli told CNBC-TV18 that India has a robust film industry and out-of-home viewing market.
He added that the merger does not need any approval from the Competition Commission of India (CCI), whereas the required clearance from the National Company Law Tribunal (NCLT), Sebi and shareholders will take six-nine months.
The CCI as a regulatory body has the power to send notification for merger, he said.
Bijli also said companies turnover was hit due to the pandemic and the merger does not meet threshold for the CCI approval.
“Post the merger, the 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 two board seats each,” according to a filing to the BSE.
PVR currently operates 871 screens across 181 properties in 73 cities, while INOX operates 675 screens across 160 properties in 72 cities.
With the merger, the combined entity will become the largest film exhibition company in India operating 1,546 screens across 341 properties across 109 cities.
Commenting on the merger announcement on Sunday, Bijli said, “This is a momentous occasion that brings together two companies with significantly complementary strengths. The partnership of these two brands will put consumer at the center of its vision and deliver an unparalleled movie going experience to them.”
He added that the film exhibition sector has been one of the worst impacted sectors on account of the pandemic and creating scale to achieve efficiencies is critical for the long term survival of the business and fight the onslaught of digital OTT platforms.
INOX Leisure Director Siddharth Jain has said, “Coming together of two iconic cinema brands, which are driven by passion, is certainly the most historic moment in the Indian cinema exhibition industry.”
He added that both companies have set high service benchmarks in an endeavor to offer the best cinema experience in the world, to the most passionate moviegoers, and would continue to do so as a unified entity.
EY is the exclusive financial advisor on the transaction.
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