New Delhi: PVR and Inox, India’s top two multiplex chains, on Sunday announced a surprise merger to create the country’s largest multi-screen player as they looked to emerge from the pandemic-induced slump and seek to tackle the onslaught from content streaming giants.

Ajay Bijli of PVR and Siddharth Jain of Inox Leisure told TOI that the move would help the merged entity — to be called PVR Inox with over 1,500 screens — better compete with the new-age deep-pocketed rivals, and added that the benefits of the synergy may be passed on to consumers in terms of aggressive ticket prices.

“We will become an entity with much stronger balance sheet. There is a lot to be done, and India is still an under-screened country,” said Bijli, who will be the MD of the merged entity.

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The merger of PVR and Inox comes in the aftermath of the pandemic, when there’s a need for a consolidation in the multiplex industry and “creating scale to achieve efficiencies critical for long term survival of the business” and to fight OTT platforms, said PVR’s Ajay Bijli, who will be MD of the merged entity.

“There is no doubt that consumer (content viewing) habits got changed (during the pandemic). One can say that there was no choice but to consume a lot of content on small screens and OTT platforms… you have big OTT players with very deep pockets. Only if you become stronger can you do that (compete). The pandemic expedited consolidation and made it more of an important thing to happen,” Bijli added.

Jain, who will be a non-executive director on the board of the merged entity, said that multiplex cinema screens were the “hardest hit” in the past two years and a stronger, merged entity was an effective way to make a comeback while also growing operations. “Someone has to start the investment cycle. What better way to do that than come together and do it… This partnership will bring in enhanced productivity through scale, a deeper reach in newer markets and numerous cost optimisation opportunities.”

The amalgamation is subject to regulatory approvals, which may take six to nine months. With the biggest screen population for any entity (India has around 9,600 theatre screens), the merger will also require approval over competition issues.

As part of the plan, Inox will merge with PVR. After merger, PVR promoters will hold 10. 62% stake while Inox promoters will have 16.66% in the combined entity. Inox shareholders will receive three shares in PVR for 10 shares of Inox.

The new company will have a board strength of 10 members, and both promoter families would have equal representation with two seats each.

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Mumbai: India’s leading multiplex chain, PVR, will merge with INOX Leisure, the second biggest, to create the country’s largest film exhibition company — with 1,546 screens in 341 properties across 109 cities. The move is a surprise as PVR had reportedly been in advanced talks with the local unit of Mexican company Cinépolis for a possible merger.

Boards of both companies approved the all-stock amalgamation of INOX with PVR on Sunday. After the merger, INOX promoters will hold 16.66% in the merged company, while those of PVR will have 10.62%. The merger is subject to approval by regulators, shareholders and stock exchanges.

It will likely not require Competition Commission of India (CCI) approval, said some analysts, as the threshold of Rs. 1,000 crore won’t be exceeded, given the damage to the sector caused by Covid-19, which closed theatres for months on end. INOX shareholders will get three shares of PVR for every 10 they hold, according to the terms of the deal. On Friday, stocks of PVR and INOX traded at their 52-week highs.

PVR closed at Rs. 1,827.60, up 2.8%, for a market value of ₹11,120 crore on the BSE. INOX ended at Rs. 470.50, up 6.3%, for a market value of Rs. 5,740 crore.

The combined entity will be named PVR INOX, although the current branding of existing screens will continue. New halls will be branded PVR INOX.

“This decisive partnership would bring in enhanced productivity through scale,” said INOX director Siddharth Jain.

PVR chairman and managing director Ajay Bijli said, “The film exhibition sector has been one of the worst impacted sectors on account of the pandemic. Creating scale to achieve efficiencies is critical for the long-term survival of the business and (to) fight the onslaught of digital OTT platforms.”

The deal, if completed, will reshape the country’s film exhibition industry that’s seeing its first consolidation in the past decade and a half. After the merger, the promoters of INOX will become co-promoters in the merged entity along with the existing promoters of PVR. The board of the merged company will be reconstituted with a total strength of 10. Both promoter families will have equal representation with two board seats each.

INOX’s Pavan Kumar Jain will be non-executive chairman, while PVR’s Ajay Bijli will be MD and his brother Sanjeev Kumar Bijli will be executive director of the merged company. Jain will be non-executive, non-independent director in the combined entity.