Theatre chain owner PVR‘s expected acquisition of DT Cinemas, announced in November 16, 2009, has not worked out and the company informed the BSE that the two firms have mutually called off their talks.
PVR was ready to offer Rs. 202 million in cash and 2.55 million shares worth approximately Rs. 360 million, and in return get the promise of an exclusive multiplex partnership. PVR would have gained 26 screens from DT Cinemas, taking its total to 134 screens. After PVR announced this, INOX Leisure decided to take the plunge and announced intent to buy 43.28 percent stake in Fame Cinemas, until Reliance ADAG jumped in to question the offer and approached the SEBI.
The acquisition agreement between PVR and DT had a deadline of 2 months to finalise conditions and details regarding PVR’s offer, which the companies later agreed to extend to February 15, 2010. Now that the time quoted has elapsed and the conditions that were precedents for the acquisition have still not been satisfied, the firms have decided to not further extend talks and move on.
The merger of PVR and DT could have had its advantages, even if it did not offer that good a boost to PVR’s network of theatres in India. PVR would have remained #3, overtaken by the Inox-Fame combo. It faces competition from #1 cinema chain owner BIG Cinemas and Essel Group’s Fun Cinemas. More on competition and the theatre industry here. PVR is also opening up multiple screens in Madhya Pradesh, Punjab and Uttar Pradesh.