INOX Leisure Ltd, and PVR Ltd. announce merger

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At their respective meetings, the Board of Directors of PVR Limited (PVR) and INOX Leisure Limited (INOX) authorized an all-stock merger of INOX with PVR.

The merger is subject to shareholder approval, stock exchange approval, SEBI clearance, and any other regulatory approvals that may be required.

INOX and PVR will merge once all approvals are received and the merger becomes operational. INOX shareholders will receive PVR shares in exchange for INOX shares at the approved share exchange (“swap”) ratio.

Post-merger, the promoters of INOX will join the existing promoters of PVR as co-promoters of the amalgamated enterprise. After the scheme’s implementation, the amalgamated company’s Board of Directors would be reconstituted, with a total board strength of 10 members and equal representation on the Board for both promoter families, with two board seats each.

Ajay Bijli will take over as Managing Director, while Sanjeev Kumar will take over as Executive Director. Pavan Kumar Jain will be named as the Board’s Non-Executive Chairman. In the amalgamated entity, Siddharth Jain will be appointed as a Non-Executive Non-Independent Director.

The combined entity’s name will be PVR INOX Limited, with existing screens continuing as PVR and INOX, respectively. While new theaters that open after the merger would be named PVR INOX.

The Independent Valuers chosen by PVR and INOX, SSPA & Co, Chartered Accountants and Drushti Desai, Registered Valuer, Partner at Bansi S. Mehta & Co., have suggested a share exchange ratio that has been agreed upon by the respective Boards.

PVR received a Fairness Opinion from Axis Capital Limited on the share exchange ratio, whereas INOX received a Fairness Opinion from Ernst & Young Merchant Banking Services LLP. Resultantly, INOX shareholders will receive 3 PVR shares in exchange for 10 INOX shares.

Post the merger, PVR Promoters will have a 10.62% stake while INOX Promoters will have a 16.66% stake in the combined entity

The combined firm would run 1546 screens over 341 properties in 109 cities, making it India’s largest cinema exhibition company. PVR now operates 871 screens across 181 properties in 73 cities while INOX currently operates 675 screens across 160 properties in 72 cities. The combination would benefit and ensure tremendous value creation for all stakeholders.

With customers at the center of the decision, the merger would focus on leveraging the capabilities of both firms to provide exceptional customer service and a fantastic theatre experience to Indian moviegoers.

While dealing with the obstacles posed by the advent of many OTT platforms as well as the pandemic’s aftermath, the merged company would also aim to provide world-class movies to customers in Tier 2 and 3 markets.

This decisive partnership would bring enhanced productivity through scale, a deeper reach in newer markets, and numerous cost optimization opportunities as we head into the industry’s revival amidst headwinds.

EY is the transaction’s exclusive financial advisor.

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