Shares of Inox Leisure and PVR on Monday jumped sharply after the film exhibition players on Sunday announced a merger to create the largest multiplex chain in the country. Inox Leisure hit its record high at Rs 563.60 on the BSE and closed at Rs 522.90, a gain of 11.3%. PVR gained 3.06% to settle at Rs 1,883.50. During the day, it rallied 9.99% to its 52-week high of Rs 2,010.35.
Both the companies on Sunday approved an all-stock amalgamation. Following this, Inox promoters will hold a 16.66% stake in the combined entity, while PVR promoters will have a 10.62% stake. Shareholders of Inox will receive 3 shares of PVR in exchange of 10 shares held in Inox. However, the merger will be subject to approvals from Sebi, shareholders and other regulators.
Analysts are of a view that the approval of the Competition Commission of India for the merger won’t be a hurdle, and the new entity will strengthen existing operations and look to expand into Tier-2 and Tier-3 markets.
“CCI approval is likely given the lower nature of operations in FY21… Given the large movie market, healthy box office collections, lower number of screens/cinemas, and a concentrated multiplex market (PVR/Inox commands over 40% market share), the market has room to add new screens. The combined entity plans to deepen their network in Tier II and III markets,” brokerage firm Motilal Oswal Financial Services said in a note on Monday.
