Update: The PVR-DT acquisition is being delayed due to pending compliance issues on part of DT Cinemas. PVR Cinemas has, in a notice issued to the BSE, revealed that the two companies have agreed to extend the long stop date (legalese for when the acquisition is slated to be complete) to February 15, 2010.
PVR will acquire DT Cinemas for Rs. 202 million and the issuance of 2,557,000 equity shares to DT Cinemas on a preferential basis.
This news comes close on the heels of its sale of 10% equity to Thailand’s leading theatre owner Major Cineplex Group for Rs. 420 million, as reported by Zee News. Major Cineplex was a JV partner of PVR’s for a bowling alley business called PVR-Blu-O and will now acquire 2.55 million preferential shares at Rs 165 per share.
PVR had reported a consolidated net profit of Rs 64.4 million and consolidated revenue of Rs 922.2 million for the quarter ended Sep 30, 2009.
Deal Size, Exclusive Mall Partners, Revenue Share
The PVR-DT Cinemas deal size is said is estimated to be Rs. 560 million, in cash and stock. PVR will issue 2.55 million shares, worth approximately Rs. 360 million to DT Cinemas (10% of the fully diluted paid up share capital) and pay Rs. 200 million in cash.
As part of the deal, PVR will have exclusive rights to operate as a multiplex partner in all mall developments of the DLF Group. DLF initially started the in-house multiplex as an attraction for other business to set up shop in their malls. By selling off a non-core business (it owns 6 operational film theatres) and partnering with PVR, the group is able to not only refocus on its core business but also create a revenue stream from PVR. According to Times of India, PVR would run these multiplexes under the revenue-sharing format, sharing 15% with DLF instead of a fixed rental for the real estate.
PVR Cinemas also gains from this symbiotic relationship through the exclusive rights which will help it strengthen its position amidst competition. DLF has future malls planned at Delhi (Chanakaya Puri), Mumbai, Chennai, Hyderabad, Noida, Jalandar and Lucknow amongst other cities, so PVR’s expansions in these cities get a direct boost. In addition, PVR gets DT’s 26 screens, taking its total to 134 screens.