Exhibitors Inox, Fame join with share sale

Combined entity becomes India's number two chain

Updated Feb. 5 14:47 Beijing time

NEW DELHI -- The Indian theatrical business saw further consolidation with leading chain Inox Leisure acquiring a 43% stake in rival Fame India Ltd. for 664.8 million rupees ($14.5 million), according to a joint announcement Wednesday by the Mumbai-based companies.

This follows a similar move last November between two New Delhi-based companies when multiplex pioneer PVR Cinemas acquired rival DT Cinemas in a cash and stock deal worth 622 million rupees ($13.5 million).

Fame owns 95 screens primarily in western India and following the sale of the 43% stake held by its founding promoters the Shroff family, Inox -- which largely operates in northern and eastern India -- will now become India's second largest theatrical chain with a combined total of 204 screens. Market leader Reliance Big Cinemas (owned by parent and DreamWorks partner Reliance Big Entertainment) runs 246 screens, while PVR follows third with 137 screens.

Inox plans to add 55 screens across 15 multiplexes by December 201,0 while Fame plans to add 25 screen, which could make the joint entity the market leader.

Inox launched eight years ago, backed by parent Gujarat Fluorochemicals and acquired the Fame shareholding through a block deal executed on the Bombay Stock Exchange by buying 15.1 million shares. Inox will make a subsequent open offer for an additional 20%, pending regulatory approval, which is estimated to cost about 300 million rupees.

“Over the next few months, we will evaluate the full benefits of integration and consolidation, to drive competitive advantage across the value chain, and consider our strategic options in accordance with regulatory guidelines. We welcome the Fame team to the Inox family, and look forward to working with them to ensure a rapid and seamless transition," Inox Group of Companies director Deepak Asher said.

“I have always believed that a consolidated play would have a strategic advantage in the business and that led us to consider this association with Inox," by Fame India MD Shravan Shroff added.

Fame was started in 1999 as a theatrical subsidiary of veteran film distributor Shringar Films.

This consolidation in the multiplex space comes at a time when the industry is also seeing the arrival of the first international player in this segment, Mexico's Cinepolis, which plans to invest about 3.70 billion rupees to launch 110 screens across eight cities over the next three years to start.