In a bid to further expand in South India, Ajay Bijli-led multiplex chain PVR Cinemas reached an agreement on Sunday to buy a 71.7% stake for Rs 633 crores in SPI Cinemas. This will bring PVR’s total screen count to 706 screens across 152 properties and 60 cities.
“PVR would acquire 222,711 equity shares of SPI Cinemas, constituting 71.7 % of the paid-up equity share capital of SPI, from existing shareholders for a total consideration of Rs 633 crore,” PVR said in a statement. “It will also issue 1.6 million equity shares of PVR Ltd, constituting approximately 3.3% of the diluted paid-up equity share capital of the company, pursuant to a scheme of amalgamation between SPI and PVR.”
SPI Cinemas is South India’s leading cinema exhibitor and runs the iconic Sathyam Cinema in Chennai. It also has a network of 76 screens across 10 cities in states like Tamil Nadu, Telangana, Karnataka, Kerala, and Andhra Pradesh. SPI, which boasts a high occupancy rate at 58%, will also help PVR to diversify its box office revenue from regional content from 19% to 22%.
“The acquisition will make PVR the undisputed leader in the South Indian market and provide an attractive platform for us to expand in that geography, which currently is highly underpenetrated in terms of multiplexes,” said Ajay Bijli, chairman and managing director, PVR Cinemas. “This transaction is a significant step in helping us achieve our vision of having 1,000 screens by 2020,” he added.
The transaction is likely to be closed in the next 30 days and the merger process is expected to be completed in the next 9-12 months. Also, the company said that both Kiran M. Reddy and Swaroop Reddy, owners of SPI Cinemas, will continue to remain associated with the business.
PVR reported a 17% increase in its net profit to Rs 52 crore for the quarter ended June 30; its revenue increased 7% to Rs 700 crore from Rs 653 crore a year ago.