The deal is valued at around Rs 633 crore, plus 1.6 million equity shares, and PVR will have over 70% shares in SPI Cinemas.
In a crucial business development on Sunday, multiplex chain PVR cinemas announced that they will be acquiring an iconic Chennai brand – SPI Cinemas Pvt Ltd, originally called Sathyam Cinemas.
According to a press release by PVR cinemas, the founders of SPI Cinemas, Kiran M Reddy and Swaroop Reddy, will continue to be associated with the business and will provide “strategic guidance in integrating the business with PVR.”
“Under the terms of the proposed acquisition, PVR would acquire 222,711 equity shares of SPI Cinemas constituting 71.7 % of the paid up equity share capital of SPI from existing shareholders for a total consideration of INR 633 crores and issue 1.6 mn equity shares of PVR Limited constituting ~3.3% of the diluted paid up equity share capital of the company pursuant to a scheme of amalgamation between SPI and PVR,” a press release from PVR said.
According to the Economic Times, the total deal could be valued at around Rs 850 crore.
A source close to the Reddys told that the decision to let PVR acquire SPI Cinemas was also partly driven by the fact that operating the business, especially in Tamil Nadu had become tough over the last few years.
Ajay Bijli, Chairman cum Managing Director, PVR Ltd said, “The acquisition of SPI Cinemas is of significant strategic value for PVR and will further cement our market leadership position in India. The acquisition will make PVR the undisputed leader in the South Indian market & provide an attractive platform for us to expand in that geography, which currently is highly underpenetrated in terms of multiplexes. Both Kiran and Swaroop have done a tremendous job in building some of the best cinemas in the country and I look forward to their continued partnership with PVR as we take the business to the next level. This transaction is a significant step in helping us achieve our vision of having 1000 screens by 2020.”
Kiran Reddy of SPI Cinemas said, “SPI Cinemas has been revolutionizing the movie watching experience for its patrons by consistently bringing in world class technology and innovative offerings. We are excited to now partner with the largest Indian multiplex chain PVR as this combines two proven business models and will create significant value for moviegoers as well as all the stakeholders.”
In 2015, SPI Cinemas sold its 11-screen multiplex Luxe situated in Phoenix Market City, Velachery, to Jazz Cinemas, a firm owned by VK Sasikala’s relatives. Though there were rumours that the family had put undue pressure on the Reddys, they have chosen not to reveal the details behind the deal.