The merger provides substantial dealing power over the entire ecosystem, including customers, real- estate innovators, content directors, technology service providers, the state exchequer and workers.
The merged company will be named PVR INOX. The boards of both PVR and INOX have approved this junction on a share- exchange base, and INOX shareholders will admit 3 shares of PVR for 10 shares of INOX.
NEW ENTRANT: OTT PLATFORM
Over-the-top (OTT) streaming services in India present limited threat to multiplexes as indeed during the lockdowns, only 40 movies went directly to OTT.
Both theatres and OTT will co-occur. “The OTT challenge, in our view, is a storm in a tea mug. While we’re conscious of the trouble, we suppose it’s inflated as the economics of taking a movie directly to OTT for a reasonable budget movie that will find a theatrical release isn’t compelling,” a report from Nirmal Bang Institutional Equities said.
In case a movie goes directly to OTT, it’s likely to get a modest 15-20 percent return on the cost of product. On the other hand, if it’s a theatrical release first, the OTT profit gets enhanced if the movie is a reasonable success.
Threats from Competition Commission of India
This apprehension stems from the fact that in a much less deals between PVR and DT theaters in 2016, some defenses had to be divested for the deal to be cleared by the CCI.
With the PVR INOX junction a positive, offering compelling profit and cost community and consolidating the sector with strong growth ahead, we retain our deal conditions on both PVR and INOX,” CLSA recommended.
Nirmal Bang estimates a target price of Rs for PVR and Rs 594 for INOX while giving a‘buy’ standing to both the stocks. The target price represents a 30 percent and 26 percent downside for the separate stocks.
JM Financial believes that the merged reality would be a stronger one and could command a decoration, given the possibilities of solidarity driving earnings upgrade. Multiplex chains PVR Ltd and INOX Leisure Ltd have decided to combine to form the largest entertainment company in the country.
MERGERING OF PVR & INOX
With PVR presently operating 871 defenses across 181 properties in 73 cities and INOX operating 675 defenses across 160 properties in 72 cities, the combined reality will come the largest film exhibition company in India, operating defenses across 341 properties in 109 cities.
Ajay Bijli would be appointed as the managing director and Sanjeev Kumar would be appointed as the administrative director. Pavan Kumar Jain would be the non-executive president of the board while Siddharth Jain would be appointed as the non-executive, non-independent director in the combined reality.
Drushti Desai, Registered Valuer, Partner at BansiS. Mehta & Co and SSPA & Co chartered accountants, the independent valuers appointed by INOX and PVR independtly. Ernst & Young Merchant Banking Services LLP gave the fairness opinion to INOX, while Axis Capital handed a fairness opinion to PVR on the share exchange rate.
