Daily Management Review

PVR to buy DT Cinemas for Rs 500 crore


06/10/2015


Consolidation has become the norm in the booming movie screen business in India



PVR to buy DT Cinemas for Rs 500 crore
India-based multiplex movie screen chain PVR Ltd has acquired real estate major DLF’s DT Cinemas for Rs 500 crore.
 
The new investment in the booming movie screen business signals a wave of consolidation unseen earlier in India. With the deal, PVR will acquire 39 screens of DT Cinemas with a seating capacity of 9000 seats in total. PVR earlier penned a deal with DY in 2010, to only abort it later. This is the second major acquisition in last five years for PVR which bought Cinemax for Rs 395 crore in 2012. Speaking on the new acquisition PVR Chairman and Managing Director Ajay Bijli said, “It has been our strategy to expand our film exhibition business both organically and inorganically over the years. This acquisition is in pursuance of our core strategy to offer a world-class cinema experience to the discerning Indian consumer.” The deal will be financed through a mix of equity, debt and internal accruals and will be paid in all cash. The transaction will be subject to regulatory approval.
 
 
With the new deal, PVR will have a presence in 44 cities with 115 multiplexes and 506 screens. DT Cinemas is an operator in the New Delhi and Chandigarh region in India with 29 screens and 6,000 seats across eight properties in these regions. DT has also committed to add 10 new screens within the next year at t7wo properties in New Delhi area, which will also go in the kitty of PVR.
 
Even while PVR was leading the race to acquire DT, Inox and another private equity player were also vying for the investment. Meanwhile, exiting from the movie screen business was the aim of the real estate player DLF, the owners of DT. The company has been trying to sell its stake in non-core businesses in a bid to reduce its mounting debt. DLF has already sold hotel chain Amanresorts as well as insurance and wind power businesses.
 
The Indian multiplex space has been in consolidation mode as lack of space for opening new cinema halls, low footfalls in a large number of malls and high rentals have made it difficult for organic growth.
 
Consolidation is a trend that had been in the high in India for the past few years, especially so in the movie screen business. Early this year, Mexican multiplex chain operator Cinepolis fully acquired Essel Group’s Fun Cinemas for an undisclosed sum. At the same time, media and entertainment firm Network18 exited from multiplex business by divesting stake in Stargaze Entertainment to Carnival Films. Carnival Group itself acquired Big Cinemas from Anil Ambani-led Reliance Group for an estimated Rs 700 crore in last year. Inox Leisure had also acquired Satyam Cineplexes in a deal worth Rs 182-crore last year to strengthen its presence in north India.
 






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