pvrcinemas

Multiplex chain PVR has announced that it has entered into ‘definitive agreements’ to acquire DLF Group‘s non-core business DT Cinemas on a slump sale basis, for a price of approximately Rs 500 crore. PVR Cinemas, in its notice issued to the BSE (pdf), said the proposed transaction is yet subject to the approval of statutory regulations.

As of now, PVR has a total of 105 multiplexes adding to 467 screens across 43 cities, while DT cinemas has 8 multiplexes with 2 upcoming ones and a total of 29 screen with 10 upcoming ones. Post acquisition, PVR’s total will stand at 115 multiplexes in 44 cities with a total of 506 screens. As per this ET report, DLF will lease these to PVR on a contract of 10-15 years, for about 15% of the gross revenue generated in the premises, including food and exhibition. DLF estimates this will generate an incremental revenue of about Rs 20-30 crore per annum for the company.

Previous acquisition attempt: This is not the first time PVR is announcing its acquisition of DT Cinemas. The company had made a similar announcement in November 2009, to acquire DT Cinemas for Rs. 202 million and the issuance of 2,557,000 equity shares to DT Cinemas on a preferential basis. However the acquisition was reported to be delayed in January 2010, as the two companies agreed to extend the long stop date (legalese for when the acquisition is slated to be complete) to February 15, 2010.

Interestingly, after PVR’s announcement of DT Cinema’s acquisition, INOX Leisure had decided to take the plunge and had acquired 43.28% in Shringar Cinemas Ltd, which operates Fame Cinemas, for Rs.66.48 crore. PVR’s deal however did not go through then, as the two firms mutually called off their talks when the long stop date arrived.

Cinemax acquisition: In August 2012 PVR received investment to the tune of Rs.108 crore from private equity firm L Capital Asia. A few months later in November 2012, PVR acquired 69.3% stake in competing multiplex chain Cinemax for Rs.394 crore. L Capital had invested Rs.82.3 crore in this deal. Following this PVR had become the largest multiplex chain in India with 351 screens.

Inox acquired Satyam Cineplexes: Last year in August, multiplex chain operator Inox Leisure Ltd acquired 100% of the equity share capital of New Delhi-based Satyam Cineplexes Ltd from its existing shareholders for Rs.182 crore. Post this acquisition Inox’s screen count in the country increased to 358 (overtaking PVR’s 351), in 91 multiplexes across 50 cities. More importantly, the Satyam Cineplexes acquisition gave Inox an entry into Delhi (and neighbouring Gurgaon, Greater Noida and Faridabad), which is dominated by PVR. Back in 2007, Inox had also acquired Calcutta Cine Pvt. Ltd operated 89 Cinemas.

Other significant acquisitions:

Last year, Kochi-based Carnival Films bought the multiplex business of Housing Development and Infrastructure Ltd (HDIL) for Rs.100 crore, as reported by Livemint. The report adds that Carnival Films has plans to acquire over 3000 screens over the next three years. Carnival Films currently operates 75 screens, and is apparently already in talks with separate multiplex operators in Andhra Pradesh, Punjab and Uttar Pradesh to buy a further 175 screens.