Multiplex chain Fame India Ltd and three of its subsidiaries are set to merge with parent firm INOX Leisure Ltd, with the company’s board expected to clear the deal in its next meeting on June 15.
After the merger, Fame will likely be rebranded as INOX, said a person familiar with the matter on condition of anonymity. The merger will create the country’s largest multiplex chain with 257 screens. At present, the Anil Ambani-led Reliance Group’s BIG Cinemas leads the pack in the country with 252 screens. PVR Ltd has around 162 screens, while Cinemax has 141 screens.
“Apart from the multiplex chain, the subsidiaries of Fame like Fame Motion Pictures Ltd, Big Picture Hospitality Services Pvt Ltd and Headstrong Films Pvt Ltd will also be merged with INOX,” said the person quoted above.
The company spokesperson could not be reached for comments on the issue. Deepak Asher, director of INOX did not respond to calls and text messages sent by Business Standard.
“The INOX group would become an undisputed leader in most regions. compared to other national players in the multiplex business like BIG Cinemas, PVR, Cinemax and Fun Republic,” said an industry official.
According to a media analyst, the merger will also help INOX to control and even bargain harder with film producers. Shares of Fame India dipped 2.5 percent on Thursday to close at Rs 46.80, while INOX ended at Rs 49.30, marginally down by 0.10 percent. The benchmark index of BSE, Sensex, rose 1.18 percent on Thursday to close trade at 16,649.05 points.
As of March 2012, INOX held 73.14 percent stake in Fame India, while Anil Ambani-promoted Reliance Capital Ltd (R-Cap) owned 22.38 percent.
The takeover battle for Fame began in February 2010 when R-Cap launched a hostile bid for a 62.08 per cent stake at Rs 83.40 a share, 63.5 per cent higher than INOX's open offer of Rs 51. INOX had acquired a 43.28 per cent stake in Fame Cinemas from its promoter, Shravan Shroff, for Rs 66.48 crore in an all-cash deal R-Cap accused Fame of rejecting its higher offer price in favour of INOX and petitioned to the market regulator, Securities and Exchange Board of India, that the deal was against the “protection of the interest of minority retail shareholders.”