CASE STUDY ON

THE MERGER OF
Priya Village Roadshow Limited
AND
INOX Leisure Limited
 The merged entity, to be known as PVR-INOX,

DEAL will become the largest film exhibition company

in India, operating 1,546 screens across 341

OVERVIEW properties in 109 cities.

MERGED ENTITY
On 27th March, 2022, PVR and INOX announced
their merger. This will be the largest merger in Enterprise Value: INR 19,667 Crore
Indian multiplex history and the merged entity
will flaunt a 70% market share in the segment. 3:10
Swap Ratio: (3 shares of PVR Ltd for 10 shares of INOX Ltd. )
The transaction has been approved by
shareholders, creditors, NSE and BSE.
Revenue Multiple 6.3x
Competition Commission of India (CCI) and SEBI
approvals are pending.
EBITDA Multiple 22.6x

Source: Capital IQ
 FILM EXHIBITION
Key Growth Drivers The Indian Theatre industry is
under-penetrated with average
INDUSTRY
occupancy only being ~30%.
$ 6,740.63
Increasing number of films
produced
Mn

Technology push and $ 3,672.61

innovative infrastructure Mn
India Event and
Exhibition
Market Size

Rising disposable income CAGR

across brackets
12.91%

Post covid recovery and

willingness to spend
Screen Share pre-pandemic (2020) 2021 2026
KEY INDUSTRY STATS
Screens per Million 111
1730
population
1460
Admissions in Cinemas 1240
(2019) - Millions 64 64
60
54

29

176 195 213 226

7

UK Japan France South US/Canada India China UK Japan France South US/Canada India China
Korea Korea
2000

Highest No. of Films Low screen density and healthy

produced
791
admissions are boosting to Movie
686
581
300
Theatre industry to a CAGR of 10-
298 269
13% in the next 5 years
UK Japan France South US/Canada India China Source: mintgenie.livemint.com
Korea
 INDUSTRY GROWTH DRIVERS
31 new malls have been planned to open in
India in the coming months. With retail sector
making a comeback, footfall it expected to India is projected to become the world’s third
flow to cinemas as well. largest economy by 2025. India’s GDP growth rate
has returned to pre-COVID-19 levels and is
Increasing expected to deliver the fastest growth among
no. of malls major economies

Occupancy rate has been growing Higher

post pandemic to 25% in Dec’22. Occupancy Economic
It is expected to grow further to Rate Growth
surpass pre-pandemic levels.
India’s per capita income will double by
2025. This will lead to rise in discretionary
spending power on entertainment.

High
Vaccine
Disposable
1.9 Billion vaccines have been administered in India Drives
Income
and with less fear among people, the footfall and
occupancy will increase. Limited
options for
The merged entity will be India’s largest entertainment
entertainment company. Limited options for entertainment like cafes and
amusement parks will drive people to theatres.

Source: economictimes.Indiatimes.com
PRIYA VILLAGE Geographical
presence across India

ROADSHOW LTD.
PVR was founded in 1997 and since then, has
completely revolutionises the cinema experience for
the Indian audiences. They have introduced the latest
technologies over the years to elevate the audience’s
visual and auditory experience and expanded Food &
Beverage offerings.
It has emerged as the undisputed market leader in
terms of the number of cinemas and screens, presence
across cities in India and Sri Lanka.

PVR’s presence

173 179k 854 74

Cinemas Seats Screens Cities
The company expects to open 125 new screens during FY’23
Source: Annual Report
INOX LEISURE
LIMITED
Geographical
presence across India

INOX Leisure Limited was founded in 2002 and one of

India’s largest multiplex chains in India and is spread
across 73 cities in India.

INOX was chosen post a nationwide tender to design,

construct and operate the prestigious multiplex in Goa.
Since the launch of the multiplex in 2004, INOX is the
venue of the prestigious International Film Festival of
India (IFFI) every year.

INOX’s presence

164 156k 702 73 The company expects to open 41 new screens during FY’23

Cinemas Seats Screens Cities

Source: Annual Report
 THE MERGED ENTITY
PVR Revenue (FY 2022): 3,328 Cr.
OPERATING METRICS Others 5% 3%
Convenience fees 11%
Combined
entity Ad revenue Box office revenues

52%
SCREENS 860 648 1,508
F&B 29%

SEATS 182,000 147,436

OCCUPANCY 32% 28% INOX Revenue (FY 2022): 1,915 Cr.

Others
FOOTFALL (mn) 87 66 153 3%4%
Convenience fees 9%
Ad revenue
ATP (INR) 210 200
Box office revenues
SPH (INR) 100 80 26% 58%
F&B

Source: mintgenie.livemint.com
 The management is expecting annual synergies of INR 225 Crore
causing 15-17% increment in EBITDA for next 24 months.
SYNERGIES
The F&B and advertising revenues will
Revenue Synergies ramp up with the combined
distribution network of the merged
entity.

The combined entity will have 1500+ screens with a 45-

Enhanced Negotiating 50% market share providing immense bargaining power
Power with film distributors, real estate developers, ad
networks and ticket aggregators.

The combined screen count will help the combined entity to

Geographical Synergies capture market. PVR is more focussed in North and South
regions while INOX has presence in East and West.

PVR INOX anticipates to spend ~ $7 Billion in the next 5

Capex Synergies years for opening 220+ screens each year with a
potential 10-15% savings in cost per screen.

Source: financialexpress.com
 M&A TRANSACTIONS
Amounts in INR Crore
Target Target EV
Acquirer Target Year Revenue EV/Revenue EBITDA EV/EBITDA
Screens (INR Cr.)
PVR SPI Cinemas 2018 89 1,000 309.6 3.2x 61.82 16.2x

PVR DT Cinemas 2016 32 433 NA NA NA NA

Carnival Films Stargaze 2015 30 90 45.21 1.9x 5.59 16.1x

Carnival Films Big Cinemas 2014 242 710 NA NA NA NA

Cinepolis India Fun Cinemas 2014 83 480 NA NA NA NA

Inox Satyam 2014 38 240 99.41 2.4x 12.19 19.7x

Carnival Films HDIL 2014 10 110 NA NA NA NA

PVR Cinemax 2012 138 570 359.2 1.6x 70.78 8.0x

INOX Fame 2010 95 241 220.92 1.1x 22.29 10.8x

Median Multiples 1.9x 16.1x

Source: nirmalbang.com | VentureIntelligence

WHY IT MAKES SENSE? POST MERGER SHAREHOLDING
PVR INOX LTD

MARKET DOMINANCE REGULATORY

RELAXATION 16.08% 16.94%
Creation of India’s largest media
company Outside the purview
• The merged entity will become India’s largest media of Competition
company with 1,546 screens (871 – PVR, 675 – INOX) across Commission 24.99%
341 properties in 109 cities.
The transaction will be exempted
• The entity will have 36-38% of the net box office collection.
from merger notification 42%
• The size will offer benefits to the organisation like better requirement as it qualified for the
negotiating power with platforms like PayTM and de-minimus exemption.
BookMyShow along with cost synergies by savings in capital
expenditure on new screens. Had it not been due to the
unprecedented outbreak of the Promoter Holding FII DII Public
SOUND FINANCIALS Covid-19 pandemic, which lowered
the turnover of the target
Promoter Holdings
Sustainable debt-equity ratio for the enterprise (INOX) to less than
₹1,000 crore in FY21, the proposed
combined entity transaction would mandatorily have
Ajay Bijli 9.42%
had to be notified for approval from Sanjeev Kumar 6.69%
• PVR has a debt equity ratio of 3.2 times while INOX has a CCI.
debt equity ratio of 0.09. The merger will help PVR to sustain Selena Bijli 0.35%
with comparatively less proportionate debt and grow
sustainably. Niharika Bijli 0.30%

Nayana Bijli 0.18%

Source: https://ijrpr.com/
THANK YOU