PVR and Inox decide to join forces. Announce merger.

In a surprise announcement, the two major cinema brands in India have decided to merge together.

(It’s important to note here that until recently, it was rumoured that PVR and and Inox are in talks with the Mexican company Cinepolis for a possible merger.)

Key points on the PVR-Inox merger

  • It’s a share swap merger and there is no cash consideration involved to either.
  • Inox will be merged into PVR for which the Inox shareholders will receive 3 PVR shares for every 10 Inox shares.
  • The combined entity will be renamed as PVR INOX Limited. Existing cinemas will continue in their respective PVR or Inox names, whereas new cinemas post merger would be named PVR INOX.
  • In the combined entity, PVR Promoters will have 10.62% stake while INOX Promoters will have the larger 16.66% stake. Board representation, however will be equal – 2 members from each out of a total board strength of 10.
    • From PVR – Ajay Bijli would be MD,  Sanjeev Kumar as Executive Director
    • From Inox – Pavan Kumar Jain would be Non-Executive Chairman, Siddharth Jain as Non-Executive Non Independent Director
  • Merger is subject to all the requisite approvals including shareholders, bankers, regulators, SEBI etc.

Rationale for the merger

  • Covid significantly impacted the cinema business during the last two years and it’s only recently the business has started reviving.
  • OTT segment is gaining popularity and becoming a threat to the traditional cinema business.

Bigger combined size of PVR and Inox will have potential economies of scale, better negotiating power with the movie distributors and also lesser competitive pressures.

Combined PVR-Inox will have a total of 1546 screens across 109 cities. Other players will be much smaller –  Carnival (450 screens), followed by Cinepolis (360 screens) and Miraj Cinemas (147 screens).

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