On Sunday, PVR Ltd has declared that the company will purchase 71.7% stake in SPI Cinemas Pvt. Ltd for ₹ 633 crores. The above step is said to boost the presence of India’s largest multiplex operator in the South Indian market.
Our sources have said that, after purchasing the stakes in SPI Cinemas Pvt. Ltd, PVR Ltd will become the seventh largest cinema exhibitor in the world. After the acquisition, PVR will have a total of 706 screens across 152 properties and 60 cities. Besides this, PVR in 2013 had already acquired Cinemax followed by the acquisition of DT Cinemas in 2016.
On the other hand SPI Cinemas Pvt. Ltd has 76 screens across 17 properties and 10 cities across Tamil Nadu, Telangana, Karnataka, Kerala, Mumbai and Andhra Pradesh. Apart from SPI Cinemas several other brands operated by SPI Cinemas Pvt. Ltd includes Palazzo, The Cinema, S2, and Escape. Our sources have also reported that SPI is soon to come up with a chain of more than 100 screens that will hit the market in next five years.
“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 ₹633 crore. It will also issue 1.6 million equity shares of PVR Ltd, constituting approximately 3.3% of the diluted paid-up equity share capital of the company, pursuant to a scheme of amalgamation between SPI and PVR,” PVR said in a statement.
The statement also stated that ₹ 385 crores out of the total of ₹ 633 crores will be paid out of PVR’s internal accruals while ₹ 150 crores will be paid through fresh debt issuance and the remaining ₹ 100 crores will be paid by SPI itself.
As per the calculations, the acquisition of SPI will not only increase the number of screens in the state but will also help PVR to diversify its content risk.
A news says that, amidst all this, Kiran M. Reddy and Swaroop Reddy the owners of SPI cinemas will be connected to the business in order to provide strategic guidance in integrating the business with PVR.