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Reliance Media Works has sold its Big Cinemas chain of movie theaters to South India’s Carnival Films.
The two companies said they have signed a definitive agreement that will see Carnival acquire a majority stake in Big Cinemas in a deal that will reduce the debt of a finance affiliate of RMW by about $116 million (7 billion rupees). Further financial details weren’t disclosed.
RMW is owned by DreamWorks partner Reliance ADAG, headed by Anil Ambani. In July, RMW merged its global film services business with leading VFX player Prime Focus.
Read more India’s Reliance, China’s Wanda Group to Explore Cinema Projects in India, U.S.
In a statement, RADAG’s finance affiliate Reliance Capital CEO Sam Ghosh said: “The proposed transaction is in furtherance of Reliance Capital’s stated objective of focusing purely on its core financial services businesses, significantly reducing exposure to non-core investments in the media and entertainment sector, and reducing overall debt.”
The transaction will reduce Reliance Capital’s leverage “through a combination of transfer of debt of RMW and infusion of cash proceeds,” the statement read.
The deal excludes real estate owned by RMW at its Imax location in Mumbai and other properties, “which are intended to be separately monetized for about $33 million (2 billion rupees),” the company said.
Reliance Capital will also have the option to acquire a pre-IPO minority stake in Carnival Cinemas at an appropriate discount, upon an eventual stock market listing of the company.
Read more Reliance MediaWorks Divests Malaysia Cinema Business
The proposed transaction is subject to necessary statutory and other approvals and is expected to close within the current financial year, which ends in March. The acquisition will make Carnival one of the top three multiplex operators in the country, with more than 300 screens nationwide. India’s largest theatrical chain is PVR Cinemas, which boosted its total screen count to over 350 after it acquired rival chain Cinemax India in 2012.
“We are targeting to achieve 1,000 screens by the year 2017, and look forward to the continued support of Reliance Group in our future growth,” said Carnival Group chairman Shrikant Bhasi.
The Big Cinemas deal confirms long-running rumors about the impending sale of the theatrical chain. Back in 2012, Mexico’s Cinepolis — the only international cinema chain in India — was also reportedly interested in acquiring Big Cinemas, which runs 515 screens worldwide, 280 of which are in India.
The Big Cinemas-Carnival deal — considered the largest in value in the Indian theatrical business — also signals the ongoing consolidation in the sector. Recently, Cinepolis boosted its India screen count to 193 after reportedly acquiring Mumbai-based Fun Cinemas for $77 million.
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