India’s largest multiplex chain PVR, and the fourth largest chain Cinepolis India, are in talks for a potential merger, sources have confirmed to Business Today. If the deal comes to fruition, the merged entity—with a valuation of more than Rs 14,000 crore and 1,260 movie screens—will be at least twice as large as the nearest rival in the business, INOX Leisure, sources say. With 667 screens and a market capitalisation of Rs 5,000 crore, INOX is currently the second largest multiplex chain.
PVR has a market cap of around Rs 10,000 crore and 860 screens. The India arm of Mexico-headquartered Cinepolis is valued at Rs 4,000-5,000 crore, sources estimate. Along with its 400 screens, it also brings to the table international backing—the only Indian multiplex company to have that advantage.
“It could be a merger where fresh shares are issued to Cinepolis as a strategic partner. It may be a no-cash, all-stock deal, so that PVR can maintain its debt,” said a source, confirming the development. PVR had a total gross debt of Rs 1,536 crore, and `678 crore liquidity, as of December 31, 2021.
PVR did not respond to Business Today’s email queries, while INOX and Cinepolis India refused to comment. The deal is critical for both chains as the pandemic and the resulting lockdowns have decimated film exhibitors’ revenues.
For PVR, unlike its previous acquisitions—South-centric SPI Cinemas, Cinemax Cinemas which is largely present in the West, and Delhi-NCR-focussed DT Cinema—Cinepolis India’s 400 screens spread across 22 cities will strengthen its pan-India presence. Its revenue nosedived from Rs 3,452 crore in the full financial year ending March 2020 to Rs 310 crore a year later, due to the pandemic.
For Cinepolis, whose 400 screens in India account only for a fraction of its Mexican parent’s 6,700 screens worldwide, the deal would mean a continued presence in India. The company, which is not listed in India, saw its standalone revenue crash during the pandemic from Rs 1,045 crore in FY20 to Rs 194 crore as of FY21, according to Tofler data. It has seen three consecutive years of loss from FY19, turning in a net loss of Rs 338 crore at the end of the full pandemic year of FY21.
Further, sources said, with the promoter and promoter group holding only 17.02 per cent in PVR as of December 2021, Chairman and MD Ajay Bijli and his family may even cash out of the business at some point.
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