PVR Limited to acquire SPI Cinemas, merger in a year’s time

Under the terms of the proposed acquisition, PVR would acquire 222,711 equity shares of SPI Cinemas constituting 71.7 % of the paid-up equity share capital of SPI from existing shareholders for a total consideration of Rs 633 crore and issue 1.6 mn equity shares of PVR Ltd constituting 3.3% of the diluted paid up equity share capital of the company pursuant to a scheme of amalgamation between SPI and PVR.

SPI Cinemas has a network of 76 screens (68 operational and 8 expected to commence operations soon) across 17 properties and 10 cities. Further, the company has a signed pipeline of over 100 screens which are expected to be rolled out over the next 5 years. SPI Cinemas has 31 operational screens in Chennai including the iconic Sathyam Cinemas, which was established in 1974.

The other roster of brands under which SPI operates cinemas include Escape, Palazzo, The Cinema and S2. In terms of occupancies across all organised multiplex chains in the country, Sathyam is expected to achieve annual admissions of about 16-17 mn moviegoers in FY19 and estimated revenues of Rs 4.1- 4.2 bn.

PVR’s total screen count will increase to 706 screens across 152 properties and 60 cities. The acquisition will also propel PVR as the 7th largest cinema exhibitor globally in annual admissions at its theatres, which will be in excess of 100 mn. Both Kiran M Reddy and Swaroop Reddy will continue to remain associated with the business and provide strategic guidance in integrating the business with PVR and create value for all the stakeholders. The transaction is expected to be closed in next 30 days and the merger is expected to be completed in next 9-12 months.