PVR at four-year high on acquisition of Cinemax

PVR Limited has rallied 8% to Rs 276, extending its previous day’s about 8% surge after the Delhi-based multiplex major said that it had entered into a “definitive agreement” with Cinemax India to acquire a 69.27% promoter’s stake in an all-cash deal worth Rs 395 crore.

“The deal would make PVR the top player in the Indian cinema exhibition space, surpassing Inox Leisure (along with Fame Cinemas) and Big Cinemas. PVR would now have 351 screens across 85 locations and leadership positions in 10 key markets across the country,” the Business Standard report suggests.

Meanwhile, PVR also announced a preferential issue of 10.62 million shares at a price of Rs 245 per share, amounting to Rs 260 crore, to its promoters—existing investor L Capital and new private equity investor Multiples Alternate Asset Management (Multiples)—to partly fund the acquisition.

The stock opened at Rs 255 and touched a four-year high of Rs 279 on the BSE. A combined 1.67 million shares have already changed hands on the counter so far against an average less than 400,000 shares that were traded daily in past two weeks.