PVR, INOX ink merger pact to create entity with 1,500 screens

New Delhi: Leading film exhibition players PVR Ltd and INOX Leisure Ltd on Sunday announced a merger deal to create the largest multiplex chain in the country with a network of more than 1,500 screens.

The boards of directors of the two companies at their meetings held on Sunday approved an all-stock amalgamation of INOX with PVR, the two companies said in separate regulatory filings.

The announcement comes at a time when the film exhibition industry has been impacted by the COVID-19 pandemic and significant pressures on the theatrical business from the accelerated growth of digital OTT platforms.

The combined entity will be named as PVR INOX Ltd with the branding of existing screens to continue as PVR and INOX respectively. New cinemas opened post the merger will be branded as PVR INOX, it added.

As per the agreement, INOX will merge with PVR in a share swap ratio of 3 shares of PVR for every 10 shares of INOX.

"Post the merger, the promoters of INOX will become co-promoters in the merged entity along with the existing promoters of PVR," the filing said.

PVR Promoters will have a 10.62 per cent stake while INOX promoters will have a 16.66 per cent stake in the combined entity, it added.

When the merger comes into effect, the board of the merged company would be reconstituted with total board strength of 10 members and both the promoter families having equal representation on the Board with two board seats each.

The merger will unlock significant complementarity and growth potential and offers compelling revenue and cost synergies, the statements added.

PVR's Ajay Bijli would be appointed as the Managing Director and Sanjeev Kumar would be appointed as the Executive Director of the merged entity.

Inox's Pavan Kumar Jain would be appointed as the Non-Executive Chairman of the Board and Siddharth Jain would be appointed as Non-Executive Non-Independent Director in the combined entity.

Explaining the rationale behind the merger, PVR CMD Ajay Bijli told reporters that the pandemic bruised the film exhibition industry quite badly for the last two years and the decibel level of OTT platforms also increased challenging the industry.

We believe that India is a market where the number one form of entertainment for people is to go out and watch movies on the big screen (and it) still remains (but) that got impacted.

We felt that by coming together of two brands who have the same vision, a qualitative approach towards giving a great consumer experience and strengthening our balance sheets will only propel the industry forward and make sure that the exhibition sector continues to thrive,

he added.

Bijli, however, asserted that the challenges of the last two years were not the trigger for the merger saying this industry has always grown organically and inorganically consolidation, mergers are not something new to this industry.