India's Largest Theater Chain PVR Acquires Rival SPI for $122 Million
The deal expands PVR's footprint to 706 screens and is projected to make the company the seventh largest cinema chain in the world in terms of admissions.
India's largest cinema chain PVR Ltd has expanded its screen count with the acquisition of South India's SPI Cinemas in a cash-plus-stock deal valued at $122 million (8.5 billion rupees).
According to PVR, the deal is projected to make the company the seventh largest cinema operator in the world in terms of admissions, clocking an estimated 105 million admissions for the 2019 financial year by which time PVR's total screen count would be 800. The company claims that this figure is arrived at on the basis of recording the highest number of admits per screen at 131,250.
SPI runs a network of 76 screens and the company also has plans to roll out over 100 screens over the next five years. With this acquisition, PVR's total screen count jumps to 706 across 152 properties and 60 cities.
PVR made the announcement via a filing with the Bombay Stock Exchange stating that the company will acquire a 71.7 percent share in SPI for a consideration of $91 million (6.33 billion rupees). PVR said it will also issue 1.6 million equity shares of the company, reflecting 3.3 percent of the diluted paid-up equity share capital of PVR, translating to $30 million (2.1 billion rupees), bringing the total value of the deal to just under 8.5 billion rupees.
PVR chairman and managing director Ajay Bijli said that the acquisition will make the company "the undisputed leader in the South Indian market and provide an attractive platform for us to expand in that geography, which currently is highly underpenetrated in terms of multiplexes." He also added that the transaction is a "significant step in helping us achieve our vision of having 1,000 screens by 2020."
PVR has eyes on overseas expansion and last year acquired a 2 percent stake in U.S. luxury cinema chain iPic for $4 million. Recently, PVR signed an agreement with Dubai-based Al Futtaim group to establish a joint venture cinema business in the Middle East, which will also aim to enter the newly opened cinema market of Saudi Arabia, and North Africa.