India’s two largest move theatre chains – PVR and INOX – have announced that they plan to merge to form one giant entertainment company. Both PVR and INOX are public listed companies engaged in cinema exhibition, related food and beverages and allied activities. "The proposed amalgamation would be in the best interest of the transferee company and the transferor company and their respective shareholders, employees, creditors, and other stakeholders," the companies said in filing the merger plan.
That filing plan said the amalgamation will result in consolidation for the long-term sustainability of the business; create value for stakeholders including respective shareholders, customers, lenders and employees as the combined business would benefit from increased scale, innovations in technology and expanded reach with increased growth opportunities, higher cross-selling opportunities to a larger base of customers, improvement in productivity and operational efficiencies, amongst others; and accelerate growth and expansion into Tier-2 and Tier-3 cities and take modern multiplex experience across more states and towns across India.
The amalgamation will be subject to approval of the shareholders of INOX and PVR, stock exchanges, SEBI and other regulatory approvals as may be required, the companies said in a joint release.
The share exchange ratio for the amalgamation will be three shares of PVR for 10 shares of INOX. Post the merger, INOX promoters will have a 16.66 per cent stake in the combined entity, while PVR promoters will hold a 10.62 per cent stake.
Post the merger, the promoters of INOX will become co-promoters in the merged entity along with the existing promoters of PVR. Upon effectiveness of the scheme, the board of directors of the merged company would be re-constituted with total board strength of 10 members and both the promoter families having equal representation on the board with two board seats each.
"Pavan Kumar Jain would be appointed as the non-executive chairman of the Board. Ajay Bijli would be appointed as the managing director and Sanjeev Kumar would be appointed as the executive director. Siddharth Jain would be appointed as non-executive non-independent director in the combined entity," the release said.
The combined entity will be named PVR INOX Limited with the branding of existing screens to continue as INOX and PVR respectively. New cinemas opened post the merger will be branded as PVR INOX.
INOX currently operates 675 screens across 160 properties in 72 cities, while PVR operates 871 screens across 181 properties in 73 cities. The combined entity will become the largest film exhibition company in India operating 1,546 screens across 341 properties in 109 cities.
With consumers at the core of the decision, the merger would focus on using the strengths of both the organizations to provide an exceptional customer service and cinema experience to Indian moviegoers, the release said.
"While strongly countering the adversities posed by the advent of various [over the rop] platforms and the after-effects of the pandemic, the combined entity would also work towards taking world-class cinema experience closer to the consumers in Tier 2 and 3 markets," it added.
Commenting on the merger, PVR chief managing director Bijli said, "This is a momentous occasion that brings together two companies with significantly complementary strengths. The partnership of these two brands will put consumers at the center of its vision and deliver an unparalleled movie-going experience to them."
"The film exhibition sector has been one of the worst impacted sectors on account of the pandemic and creating scale to achieve efficiencies is critical for the long term survival of the business and fight the onslaught of digital OTT platforms," he added.
INOX director Siddharth Jain said that the "decisive partnership" would bring in enhanced productivity through scale, a deeper reach in newer markets and numerous cost optimization opportunities.