PVR buying 95% stake in Cinemax

Multiplex chain operator PVR on Thursday said it will acquire upto 95.27 per cent stake in Cinemax India, a Kanakia Group firm which is into movie exhibition business in India, in a deal worth about Rs 543 crore.

According to the agreement, PVR’s wholly-owned subsidiary Cine Hospitality would acquire 69.27 per cent stake owned by the promoter group of Cinemax at a price of Rs 203.65 for an all cash consideration of Rs 395 crore.

As per Sebi rules, this will be followed by an open offer for an additional 26 per cent (up to 72.80 lakh equity shares) at Rs 203.65 per share, taking the total deal size to about Rs 543 crore.

With this deal, PVR emerges as the biggest player in the multiplex business with 87,493 seats. PVR currently has 213 screens in 46 properties while Cinemax has 138 screens at 39 properties. In contrast, Inox has 256 screens while Big Cinemas has 254 screens.

So, D-Street gave thumbs up to the deal as PVR shares closed with nearly 8 per cent gains on the BSE as the stock hit a 52-week high of Rs 275 in intraday trade but closed at Rs 255.45.

Cinemax shares -- which jumped over 100 percent in the last one month -- were locked up after rising 5 per cent to Rs 184.25. Further, PVR also announced a preferential issue of equity of 1.06 crore shares at a price of Rs 245 per shares amounting to Rs 260 crores to Promoters, existing investor - L Capital and new private equity investor - Multiples Alternate Asset Management (Multiples).

Under the preferential issue of equity shares in PVR Limited, Multiples will invest an amount of approximately Rs 153 crore, L Capital would invest approximately Rs 82.3 crore and promoters would invest approximately Rs 25 crore into PVR. Post the above dilution, both Multiples Private Equity and L Capital would own approximately 15.8 per cent stake each in the company and the Promoters will hold 32 percent stake in the company.