PVR, India’s largest multiplex chain, recently announced that it will be acquiring SPI Cinemas in a cash-cum-stock deal. As per the terms of the acquisition deal, PVR has agreed to purchase a 71.7% stake in SPI Cinemas for a sum of Rs.633 crore. This acquisition will help PVR enhance its footing in the South Indian market and will make the company the 7th biggest cinema exhibitor worldwide, given that SPI Cinemas is South India’s largest cinema exhibitor. In the past, PVR had acquired Cinemax and DT Cinemas in 2013 and 2016, respectively.
The acquisition agreement stated that PVR would acquire a total of 2,22,711 equity shares of SPI Cinemas that constitute 71.7% of SPI Cinemas’ paid-up equity share capital, from the firm’s current shareholders, for Rs.633 crore. Further, PVR will also be issuing around 1.6 million of its equity shares, accounting for a total of 3.3% of the company’s diluted paid-up equity share capital. The transaction between the two companies is likely to close within the next 30 days.
Of the total Rs.633 crore, PVR will pay Rs.385 crore out of its internal accruals, while a payment of Rs.150 crore will be made via fresh debt issuance. The remaining Rs.100 crore will be paid to SPI, subject to SPI Cinemas completing certain specific milestones.
EY India served as the sole advisor for the transaction between the two companies. SPI Cinemas generated a total revenue of Rs.310 crore during FY18, while PVR’s total revenue touched Rs.2,365 crore during the same period. SPI Cinemas has an average occupancy ratio of 58%, which is higher than PVR’s average occupancy ratio of 31.3%. Upon the completion of this acquisition, PVR’s overall screen count across the country will rise to 706.
PVR also added in its statement that Mr. Kiran M. Reddy and Mr. Swaroop Reddy, the current owners of SPI Cinemas, will continue to be associated with the company and will provide counsel and assistance in merging the two businesses to create value for all involved parties.
Sources: The Times of India, Livemint