PVR, INOX to merge operations; Ajay Bijli to be MD of new entity

Film exhibition major PVR Ltd (transferee company) on Sunday said its board of directors has approved a scheme of amalgamation of INOX Leisure Limited (transferor company) into and with the company.
 
The board of INOX also approved the merger scheme.
 
"The board of the company has also approved the execution of a merger co-operation agreement between the transferor company, the transferee company, GFL Limited, INOX Infrastructure Limited, Pavan Kumar Jain, Siddharth Jain, Ajay Bijli and Sanjeev Kumar (merger co-operation agreement) which sets out the manner of effecting the proposed amalgamation contemplated under the scheme, the representations and warranties being given by each party and the rights and obligations of the respective parties," PVR said in an exchange filing.
 
Both PVR and INOX are public listed companies engaged in cinema exhibition, related food and beverages and allied activities.
 
"The proposed amalgamation would be in the best interest of the transferee company and the transferor company and their respective shareholders, employees, creditors and other stakeholders...," the filing added.
 
It said the amalgamation will result in consolidation for the long-term sustainability of the business; create value for stakeholders including respective shareholders, customers, lenders and employees as the combined business would benefit from increased scale, innovations in technology and expanded reach with increased growth opportunities, higher cross-selling opportunities to a larger base of customers, improvement in productivity and operational efficiencies, amongst others; and accelerate growth and expansion into Tier-2 and Tier-3 cities and take modern multiplex experience across more states and towns across India.
 
The amalgamation will be subject to approval of the shareholders of INOX and PVR, stock exchanges, SEBI and other regulatory approvals as may be required, the companies said in a joint release.
 
Share exchange ratio and promoter holding
 
The share exchange ratio for the amalgamation will be three shares of PVR for 10 shares of INOX. Post the merger, INOX promoters will have a 16.66 per cent stake in the combined entity, while PVR promoters will hold a 10.62 per cent stake.
 
Post the merger, the promoters of INOX will become co-promoters in the merged entity along with the existing promoters of PVR. Upon effectiveness of the scheme, the board of directors of the merged company would be re-constituted with total board strength of 10 members and both the promoter families having equal representation on the board with two board seats each. 
 
"Pavan Kumar Jain would be appointed as the non-executive chairman of the Board. Ajay Bijli would be appointed as the managing director and Sanjeev Kumar would be appointed as the executive director. Siddharth Jain would be appointed as non-executive non-independent director in the combined entity," the release said.
 
PVR INOX Ltd
 
The combined entity will be named PVR INOX Limited with the branding of existing screens to continue as INOX and PVR respectively. New cinemas opened post the merger will be branded as PVR INOX.
 
INOX currently operates 675 screens across 160 properties in 72 cities, while PVR operates 871 screens across 181 properties in 73 cities. The combined entity will become the largest film exhibition company in India operating 1,546 screens across 341 properties in 109 cities.
 
With consumers at the core of the decision, the merger would focus on using the strengths of both the organisations to provide an exceptional customer service and cinema experience to Indian moviegoers, the release said.
 
"While strongly countering the adversities posed by the advent of various OTT platforms and the after-effects of the pandemic, the combined entity would also work towards taking world-class cinema experience closer to the consumers in Tier 2 and 3 markets," it added.
 
Commenting on the merger, PVR CMD Bijli said, "This is a momentous occasion that brings together two companies with significantly complementary strengths. The partnership of these two brands will put consumers at the centre of its vision and deliver an unparalleled movie-going experience to them."
 
"The film exhibition sector has been one of the worst impacted sectors on account of the pandemic and creating scale to achieve efficiencies is critical for the long term survival of the business and fight the onslaught of digital OTT platforms," he added.
 
INOX Director  Siddharth Jain said that the "decisive partnership" would bring in enhanced productivity through scale, a deeper reach in newer markets and numerous cost optimisation opportunities.
 
Shares of PVR ended 2.84 per cent higher at Rs 1,827.60 apiece on the BSE on Friday, while INOX shares closed 6.10 per cent higher at Rs 469.70 apiece.

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