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INOX to buy Satyam Cineplexes for $30M

30 July, 2014

INOX Leisure Limited (INOX) is acquiring New Delhi-headquartered Satyam Cineplexes Limited (Satyam) for Rs 182 crore ($30 million), as per a stock market disclosure. This will strengthen its position as the second-largest multiplex operator in the country behind PVR.

Satyam has nine multiplexes, including three in Delhi and one each in Amritsar, Indore, Jodhpur, Mysore, Rohtak and Aurangabad with total 38 screens. The deal values it at Rs 4.8 crore per screen (taking into account an estimated debt of around Rs 60 crore, the valuation moves up to around Rs 6.3 crore per screen) as against Rs 4.13 crore/screen that PVR effectively paid in the last big deal in the sector less than two years ago.

It had earlier raised money from a fund managed by IFCI Venture Capital and the promoters had later bought back this stake. Satyam was eyeing a larger PE funding for years but it did not materialise.

The proposed acquisition of one of the industry’s prime assets, is a part of INOX’s strategy to expand its footprint across the country and gain a significant foothold in the North Indian region, it said on Wednesday.

Post the proposed acquisition, INOX shall be present in 50 cities with 91 multiplexes and 358 screens. PVR, which is backed by L Capital and Multiples PE, currently has 444 screens across 101 locations in 43 cities.

The acquisition of Satyam shall be the third by INOX in less than a decade. INOX has earlier acquired Calcutta Cine Private Limited in 2007, which triggered the consolidation phase in the multiplex industry, followed by Fame India Limited in 2010 after a fighting off a takeover battle with Reliance Group’s Big Cinemas.

Deepak Asher, director, INOX Group of Companies, said, “It has been our strategy to expand our multiplex business both organically and inorganically over the years. With this acquisition, we will strengthen our position further in the industry as well as in the country, especially North India.”

Over the next few months, the firm will evaluate the full benefits of integration and consolidation, to drive competitive advantage across the value chain, and consider its strategic options in accordance with regulatory guidelines, he added.

Deven Chachra, managing director, Satyam, said “Our decision was driven by our belief in INOX’s professional management and strong customer focus, which we believe would translate into a value add for our employees, our entire distributor and supplier ecosystem as well as all our patrons.”

While the promoters are selling all of their stake and will pick liabilities and assets, their partnership with INOX Group will continue in the form of a long-term lease in three units in Delhi.

Grant Thornton Advisory acted as sole financial advisors and Khaitan & Co acted as legal advisors to INOX Leisure Limited.

BMR Advisors acted as sole financial advisors and Luthra & Luthra Law Offices acted as the legal advisors to the shareholders of Satyam Cineplexes Limited.

PVR had sealed a large deal by acquiring Cinemax a couple of years ago and overtook INOX as the top multiplex operator in terms of number of screens. Prior to that INOX’s acquisition or Fame had made it the top player in its business.

As first reported by VCCircle, INOX was in talks to buy Fun Cinemas which could have pushed it back up as the market leader. However, this deal did not materialise.

Media reports suggest several others are in the fray to acquire or looking to sell out in the multiplex business. These include Big Cinemas and Mexico’s Cineplex. Early this month, South-based privately held media and entertainment group Carnival, which runs a regional cinema chain under Carnival Cinemas banner, struck a deal to acquire real estate developer Housing Development and Infrastructure Ltd’s (HDIL) multiplex chain Broadway Cinema for Rs 110 crore ($18 million).

Last week, Mumbai-based KSS Ltd, formerly known as K Sera Sera Limited, said it has decided to sell a significant minority stake in its subsidiary K Sera Sera Miniplex Ltd through offer for sale. The firm, which is engaged in the in-house production and distribution of motion pictures in India, is planning to divest 26 per cent equity stake in the subsidiary for nearly Rs 200 crore (around $33.27 million). At this valuation the firm would get around Rs 52 crore from the proposed transaction.

(Edited by Joby Puthuparampil Johnson)


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1 Comment
Nitin Sood . 3 years ago

The total Enterprise value for the deal is understood to be about Rs.240 crs based on market info with about 50-60crs of debt in addition to Rs.182 crs payout for equity value.

INOX to buy Satyam Cineplexes for $30M

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