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PVR up 3% on acquiring DLF's DT Cinemas

The stock opened at Rs 700 and touched a high of Rs 701 on the NSE. DLF, on the other hand, had moved up 2.5%

Puneet Wadhwa  |  New Delhi 

PVR was trading around 3%, or Rs 19, higher at Rs 686 levels in trade on Wednesday morning, after the company announced that it has entered into a definitive agreement to acquire the cinema exhibition business of DLF Utilities Limited operated under the brand name of “DT Cinemas” on a slump sale basis for Rs 500 crore.

The stock opened at Rs 700 and touched a high of Rs 701 on the National Stock Exchange (NSE). DLF, on the other hand, had moved up 2.5% in morning deals on the NSE to Rs 114 levels. By comparison, the CNX Nifty logged a gain of 0.8% to touch 8,088 levels at 9:30am.

DT Cinemas currently operates 29 screens with approximately 6,000 seats across 8 properties in the National Capital Region (NCR) and Chandigarh. PVR, on the other hand, has 467 screens across 105 locations in 43 cities. As a result of the proposed acquisition, PVR will have a presence in 44 cities with 115 multiplexes and 506 screens.

Earlier in November 2009, DLF had signed an agreement with PVR to sell DT Cinemas, but the deal fell through in February 2010, reports suggest.

“It has been our strategy to expand our film exhibition business both organically and inorganically over the years. This acquisition is in pursuance of our core strategy to offer a world class cinema experience to the discerning Indian consumer,” said Ajay Bijli, chairman and managing director, PVR Ltd.

According to Saurabh Chawla, senior executive director, DLF, the deal was in-line with their strategy to focus on our core business and divest non-core businesses or assets. “It shall provide the management a more focussed approach for enhancing value especially in our retail mall business,” he added.

Analysts remain say the deal will strengthen PVR’s dominance of the lucrative Delhi-NCR

“This acquisition is strategic and may not offer immediate upside though is likely to create value in the long run. PVR plans to fund this acquisition through a mix of equity (preferential allotment / QIP) and debt (~70:30). We maintain our BUY rating and target price of Rs 800,” said Jaykumar Doshi, an analyst tracking the company with Kotak Institutional Research.

First Published: Wed, June 10 2015. 09:45 IST