INOX Leisure, PVR surge after announcing merger

Shareholders will receive 3 shares of PVR in exchange of 10 shares in INOX.

Shares of INOX Leisure were up 11.90% at Rs 525.60.

Shares of PVR jumped 6.06% at Rs 1938.35.

The board of PVR and INOX Leisure, at their respective meetings held on Sunday (27 March 2022), approved an all stock amalgamation of INOX with PVR.

The amalgamation is subject to approval of the shareholders of PVR and INOX respectively, stock exchanges, SEBI and such other regulatory approvals as may be required.

Upon obtaining all approvals, INOX will merge with PVR. INOX shareholders will receive 3 shares in PVR for 10 shares of INOX.

Post the merger, PVR promoters will have 10.62% stake while INOX promoters will have 16.66% stake in the combined entity.

The board of the merged company would be re-constituted with total board strength of 10 members and both the promoter families having equal representation on the board with 2 board seats each.

Ajay Bijli would be appointed as the managing director and Sanjeev Kumar would be appointed as the executive director. Pavan Kumar Jain would be appointed as the non-executive chairman of the board. Siddharth Jain would be appointed as non-executive non-independent director in the combined entity.

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

PVR currently operates 871 screens across 181 properties in 73 cities and INOX operates 675 screens across 160 properties in 72 cities. The combined entity will become the largest film exhibition company in India operating 1546 screens across 341 properties across 109 cities.

The companies said that merger offers compelling revenue and cost synergies. "While strongly countering the adversities posed by the advent of various OTT platforms and the after-effects of the pandemic, the combined entity would work towards taking world-class cinema experience closer to the consumers in Tier 2 and 3 markets," the joint statement said.

On a consolidated basis, Inox Leisure reported net loss of Rs 1.32 crore in Q3 December 2021 as against net loss of Rs 102.50 crore in Q3 December 2020. Net sales surged 1892.41% to Rs 296.47 crore in Q3 December 2021 over Q3 December 2020.

On a consolidated basis, PVR reported net loss of Rs 10.18 crore in Q3 December 2021 compared with net loss of Rs 49.10 crore in Q3 December 2020. Net sales surged 1252.8% to Rs 614.15 crore in Q3 December 2021 over Q3 December 2020.

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