Mumbai: Gurgaon based PVR Cinemas is in the last lap of negotiations to acquire multiplex chain DT Cinemas, a subsidiary of real estate developer DLF Ltd, as it seeks to cement its position as the country’s largest cinema exhibitor.
“PVR and two other cinema chains were in negotiations and now PVR is leading the race to close the deal. The deal is in the final stages,” said one of two persons familiar with the development.
“DLF is looking to fetch nearly Rs.500 crore through this sale. One of the reasons that it is seeking this kind of valuation is because it is in the process of adding two new large properties in Noida and Chanakyapuri (in Delhi) and most of the existing screens are in great locations,” said the second person.
“We are not looking to sell our asset. Though we have been approached by buyers… we are not looking to sell,” said Rajeev Talwar, whole-time director at DLF.
PVR has been scouting for cinema chains across India as it seeks to consolidate its lead in a sector that saw significant consolidation over the past year.
In July 2014, Inox Leisure Ltd, the second largest exhibition chain by the number of screens, acquired Delhi-based Satyam Cineplexes Ltd for overRs.200 crore, including debt. With the acquisition, Inox expanded its presence to 50 cities, with 91 multiplexes and 358 screens. At the time, Inox had said the acquisition of Satyam was part of its strategy to expand its footprint across the country, especially in northern India.
In December 2014, Carnival Films Pvt. Ltd, backed by commodity trader Shrikant Bhasi, bought Anil Ambani-controlled Big Cinemas in a deal worthRs.700 crore.
Within a month of that deal, Carnival Films bought Stargaze Entertainment Pvt. Ltd from a unit of Mukesh Ambani-controlled Network18 Media and Investments Ltd for an undisclosed amount.
PVR is the only firm which did not make acquisitions last year, even though it was in negotiations with Chennai-based SPI Cinemas (formerly known as Sathyam Cinemas). Its last acquisition was back in 2012, when it acquired the Cinemax chain, with 135 screens.
According to a 4th November research report by Standard Chartered Securities (India) Ltd, PVR has taken an enabling resolution to raise Rs.500 crore in equity to fund inorganic growth opportunities. It remains a clear leader in the multiplex segment with 471 screens.
According to a 21st April report by IIFL Institutional Equities, PVR plans to add 60 new screens annually in the next three years.
“PVR’s properties are in prime locations and are part of large malls, which allows it to charge its customers a premium. PVR’s per-footfall revenue in fiscal 2014 was around 13% higher than Inox,” the report said, adding that the management plans to double its screen count to 1,000 by the end of fiscal 2018.
If the deal with DT Cinemas is closed, PVR’s plans to add screens in the north, especially in the National Capital Region, will get a jumpstart.
DT Cinemas currently runs 29 multiplex screens in Dehi, Gurgaon and Chandigarh with a combined capacity of more than 6,200 seats, according to the company’s website.
