Movie theater chain PVR Ltd on Tuesday acquired real estate major DLF’s DT Cinemas for Rs 500 crore in yet another consolidation in the cinema exhibition business in India. PVR, which had in February 2010 aborted a similar deal with DLF, today signed a definitive agreement with the realty major to acquire 39 screens of DT Cinemas with a total capacity of around 9,000 seats.
At a meeting held today, PVR’s Board approved the deal, its second major acquisition after acquiring Cinemax for Rs 395 crore in 2012. Commenting on the deal, PVR Chairman-cum-Managing Director Ajay Bijli said: “It has been our strategy to expand our film exhibition business both organically and inorganically over the years. “This acquisition is in pursuance of our core strategy to offer a world-class cinema experience to the discerning Indian consumer.”
As a result of the proposed acquisition, PVR will have a presence in 44 cities with 115 multiplexes and 506 screens, PVR said in a statement. DT Cinemas currently operates 29 screens with about 6,000 seats across eight properties in the National Capital Region and Chandigarh.
In the next 12 months, DT Cinemas proposes to add 10 new screens with about 3,000 seats at two properties in the National Capital Region. DLF CEO (Rental Business) Sriram Khattar said the deal is for a total of 39 screens. “Combining our unrelenting focus on providing a wholesome experience at our malls with PVR’s deep knowledge of cinema business, we look forward to continue enhancing our best-in-class offerings for the customer,” he added.
In November 2009 as well, DLF had signed an agreement with PVR to sell DT Cinemas, but the deal fell through in February 2010. It is understood that Inox and a private equity player were also in the race for DT Cinemas before DLF decided to go back to PVR. DLF, the country’s largest realty firm, said the deal is part of its strategy to exit non-core businesses and cut huge debt of over Rs 20,000 crore. It has already sold hotel chain Amanresorts as well as insurance and wind power businesses.
The Indian multiplex space has been in consolidation mode as lack of space for opening new cinema halls, low footfalls in a large number of malls and high rentals have made it difficult for organic growth. In January this year, Mexican multiplex chain operator Cinepolis fully acquired Essel Group’s Fun Cinemas for an undisclosed sum. Media and entertainment firm Network18 exited from multiplex business by divesting stake in Stargaze Entertainment to Carnival Films for an undisclosed sum.
Bijli said PVR’s deal with DLF for DT Cinemas “is an all cash deal which will be funded through a mix of equity, debt and internal accruals.” When asked about the steep increase in valuation since the aborted deal in 2010, he said: “There is no question of regret. Sometimes things work out, sometimes they don’t. The whole market potential has changed dramatically and DT Cinema’s earning capacity in the coming years makes it a good fit for us.”
On whether PVR is planning more acquisitions, Bijli said: “We continue to grow organically. We plan to add 60-70 screens every year. If there (is) another opportunity that is a right fit and is at the right value, we will look at it.” DLF Senior Executive Director Saurabh Chawla said: “The deal is in line with our strategy to focus on core business and divest non-core businesses or assets… It shall provide the management a more focused approach for enhancing value, especially in our retail mall business.”
The proposed transaction will be subject to approval of applicable statutory and regulatory approvals and satisfaction of customary conditions precedent. The consolidation in multiplex business saw Carnival Group acquiring Big Cinemas from Anil Ambani-led Reliance Group for an estimated Rs 700 crore, the biggest ever in this sector in December 2014. Similarly, in July 2014, Inox Leisure had acquired Gurgaon-based rival Satyam Cineplexes in a Rs 182-crore deal to strengthen its presence in north India.