BENGALURU: Shares of the country’s largest multiplex operators PVR Ltd and INOX Leisure Ltd surged on Monday after the firms floated their plans to merge, as the entertainment industry looks to bounce back from the Covid-19 crisis and minimise losses.
INOX, the country’s second-biggest multiplex chain, will merge with bigger rival PVR in an all-stock deal, with INOX shareholders receiving three shares in PVR for every 10 shares of INOX, the companies said in a regulatory filing on Sunday.
With PVR currently operating 871 screens in 73 cities and INOX owning 675 screens in 72 cities, the combined entity will become the largest film exhibition company in India with 1,546 screens across 109 cities, the companies said.
“This is big. We did not expect the two biggest players would merge,” Ajit Mishra, vice president, research at Religare Broking said, adding that despite original content on streaming services such as Netflix, Amazon Prime Video and Walt Disney Co’s Hotstar, theatres were starting to witness a recovery in footfalls.
The pandemic had brought the Bollywood industry to a grinding halt, but production houses are now starting to go with “theatre only” releases and banking on celebrities such as Alia Bhat as the country inches toward normalcy.
PVR shares jumped as much as 10% and were last trading up 7%, while INOX Leisure was up 14.8%, as of 0443 GMT, after surging 20% to a record high earlier in the session.
Both companies said the merger would help improve efficiency, reach newer markets and optimise cost. New cinemas would be branded as PVR INOX.
“We believe there is a high likelihood of the deal going through and the Competition Commission of India too may not object on the merger,” said Karan Taurani, senior vice-president at Elara Capital.
INOX, the country’s second-biggest multiplex chain, will merge with bigger rival PVR in an all-stock deal, with INOX shareholders receiving three shares in PVR for every 10 shares of INOX, the companies said in a regulatory filing on Sunday.
With PVR currently operating 871 screens in 73 cities and INOX owning 675 screens in 72 cities, the combined entity will become the largest film exhibition company in India with 1,546 screens across 109 cities, the companies said.
“This is big. We did not expect the two biggest players would merge,” Ajit Mishra, vice president, research at Religare Broking said, adding that despite original content on streaming services such as Netflix, Amazon Prime Video and Walt Disney Co’s Hotstar, theatres were starting to witness a recovery in footfalls.
The pandemic had brought the Bollywood industry to a grinding halt, but production houses are now starting to go with “theatre only” releases and banking on celebrities such as Alia Bhat as the country inches toward normalcy.
PVR shares jumped as much as 10% and were last trading up 7%, while INOX Leisure was up 14.8%, as of 0443 GMT, after surging 20% to a record high earlier in the session.
Both companies said the merger would help improve efficiency, reach newer markets and optimise cost. New cinemas would be branded as PVR INOX.
“We believe there is a high likelihood of the deal going through and the Competition Commission of India too may not object on the merger,” said Karan Taurani, senior vice-president at Elara Capital.
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