PVR-INOX deal: Share prices of multiplex players PVR and Inox Leisure rose 5 and 16 per cent respectively in early trade after major film exhibition players PVR and Inox Leisure on Sunday announced a merger deal to create the largest multiplex chain. The new entity, named ‘PVR INOX Limited’, will have a network of 1,546 screens in India. INOX investors will receive PVR shares in exchange for shares in INOX at the agreed swap ratio. Inox Leisure touched a 52-week high of Rs 563.60 and PVR touched a 52-week high of Rs 2,010.35 by over 20 per cent.
At the board meeting of both companies on Sunday, an all-stock amalgamation deal was reached with INOX shareholders acquiring 3 shares of PVR for 10 shares of INOX. Inox Group Chairman Pawan Kumar Jain will be the non-executive chairman of the board of the combined entity, while Ajay Bijli will be appointed as the managing director of the merged entity and Siddharth Jain as the non-executive non-independent director. Power. The merged company will have a total of 10 members on its board of directors. PVR and Inox said the merger, which was subject to regulatory approval, would help both companies improve efficiencies, reach new markets and optimize costs.
Abhay Agarwal, Founder and Fund Manager, Piper Serica, said: “The multiplex business is a very tough business with high capex and high fixed opex. Even in a fast growing market like India, multiplexes are struggling to generate free cash flow. The business model in its current form is that of a proud QSR as more than 80 percent of profits come from the sale of high-priced food and beverages. The film screening business is broken at best. Advertising revenues come from the local area. advertisers and some standard government advertisements. Viewership depends entirely on the quality of new releases, and multiplexes have no control over that. Most importantly, in terms of releasing new content They are losing to international OTT giants.”
“Therefore, this merger of PVR and INOX should be viewed as a defensive move of last resort to increase cost efficiency. It will also give them some strength to push the studio for theatrical release. However, it will be interesting to see how the merged entity creates a coherent culture,” said Agarwal.
At 11:13 am, PVR was trading up Rs 76.80 or 4.22 per cent at Rs 1,898.90 and Inox Leisure was up Rs 58.45 or 12.44 per cent at Rs 528.15 on the BSE.
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