The stock of multiplex chain Cinemax India zoomed 19.99 per cent on Friday on market rumours of a possible takeover attempt by one of its rival multiplex chains. The scrip hit the upper circuit on the Bombay Stock Exchange (BSE) on Friday, closing at Rs 99.95.
The buzz that multiplex players Inox Leisure, PVR Ltd and Cinepolis India are interested in Cinemax fuelled the activity in the counter.
Cinemax operates 39 properties with 138 screens and has a strong presence in western India. It is one of the dominant players in Mumbai with 45 screens at 14 locations. The company is expected to earn a revenue of Rs 450 crore in this fiscal and according to experts tracking the sector, the valuation would be close to Rs 600 crore-700 crore.
“There are at least three players — Inox Leisure, PVR and Cinepolis — interested in Cinemax,” said a person familiar with the development.
When contacted, Inox Leisure director Deepak Ashar refused to comment, while PVR chairman and M D Ajay Bijli said he is “not at all bidding for Cinemax”.
However, PVR CFO Nitin Sood had told Business Standard earlier that the company is open for inorganic expansion. Cinemax promoters could not be reached.
Recently, Reliance Media & Entertainment Fund had acquired 160,000 Cinemax shares for Rs 1.22 crore. So will it also go for a hostile bid? A hostile bid, however, looks unlikely as the promoter holds 69.27 per cent stake in Cinemax. The company had recently demerged its exhibition and properties business into two different companies and listed the cinema exhibition business under Cinemax India Limited (CIL). This also fuelled the rumours of a possible sale.
Earlier, both Inox Leisure and Reliance ADA Group had locked horns over buying out Fame India, another multiplex chain, and both the companies had announced open offers. Ultimately Inox picked up the majority stake, including that of promoters. Inox Leisure shares jumped 2.28 per cent to close at Rs 74.15, while PVR shares closed 1.24 per cent down at Rs 231.05 on the BSE on Friday.