Shares of multiplex chain operators PVR and INOX Leisure gained up to 3% in intraday trade on Wednesday as they got an approval from the stock exchanges for the proposed scheme of amalgamation. In an exchange filing, both the companies notified that they have received ‘no objection’ certificates from the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) for the merger deal announced in March. The ‘no objection’ certificate is mandatory for getting approval from the National Company Law Tribunal and other regulatory approval for the proposed deal.
“The company has received an observation letter with “ no adverse observations” dated 20th June 2022 from BSE Limited and observation letter with “ no objection” dated 21st June 2022 from National Stock Exchange of India Limited respectively in relation to the scheme of amalgamation,” PVR says in a BSE filing. INOX Leisure also mentioned the same in its release.
The scheme of amalgamation remains subject to applicable regulatory and other approvals, says the statement.
Following the announcement, shares of PVR gained as much as 2% to hit an intraday high of ₹1,818.40, against the previous closing price of ₹1,782.60 on the BSE. The stock has gained 6% in the last two sessions.
Similarly, INOX Leisure opened higher at ₹488, against the previous closing price of ₹1,782.60, and rose 2.7% to touch an intraday high of ₹494.70 on the BSE. The stock has been gaining for the last 3 days and has risen 7% during this period.
In sharp contrast, the BSE Sensex was trading 522 points lower at 52,009 levels at the time of reporting.
In March, PVR and INOX Leisure, the country’s largest multiplex chains, had announced a merger to create a network of over 1,500 screens across 109 cities in India. With PVR currently operating 871 screens across 181 properties in 73 cities and INOX operating 675 screens across 160 properties in 72 cities, the combined entity is likely to become the largest film exhibition company in India operating 1,546 screens across 341 properties across 109 cities.
INOX will merge with PVR in a share swap ratio of three shares of PVR for every 10 shares of INOX, subject to their shareholder's approval, SEBI, and other regulatory nods. The merged entity will be named as PVR INOX Limited, with the branding of existing screens to continue as PVR and INOX. New cinemas opened post the merger will be branded as PVR INOX.
The mega-merger was announced in the wake of rising demand for digital over-the-top (OTT) platforms during the pandemic, which has badly impacted the film exhibition sector. OTT platforms such Netflix, Amazon's Prime Video, and Disney Hotstar reached their peak during the Covid-19 pandemic in India as cinema halls, theatres, multiplexes were closed to contain the spread of the virus.