PVR Ltd, the largest multiplex chain operator in the country which picked a majority stake in Cinemax India Ltd last November, has completed the open offer and upped its stake in the company to 93 per cent.
The majority stake acquisition by PVR triggered a mandatory open offer. Since listed companies need to meet the minimum public holding limit of 25 per cent by June 2013, to remain listed on Indian bourses, PVR will either have to dilute its holding or have to delist Cinemax.
When contacted by VCCircle, Nitin Sood, CFO of PVR Ltd, said, “We are still evaluating different options under the SEBI guidelines and getting advice. After 60 days, we should have clarity on what to do in order to meet the minimum public holding norm. For the same, we are taking advice from the bankers who did the deal.”
Axis Capital was the manager to the offer.
PVR acquired 69 per cent stake through a deal with Cinemax promoters and managed to garner another 23.9 per cent in the open offer to take its holding to 93.19 per cent, according to a regulatory disclosure. The open offer cost around Rs 136.4 crore ($25 million), taking the total cost of acquisition to around $96 million.
Cinemax scrip, which had tanked over the past there weeks, shot up 5 per cent to hit the upper circuit on Friday and closed at Rs 121.65 a share on the BSE. The open offer was at Rs 203.65 a share.
Sood said at present, the company is focusing on integrating the two brands and the first phase will start in the next 12 months.
“We will be integrating the two brands in cost-effective locations first. We will do the rebranding in regions where we have to put less capital expenditure and the conversion of Cinemax into PVR will drive major payback,” he said.
However, for locations where Cinemax is a known brand and has greater market presence than PVR, the rebranding can wait, he added.
“We are in no hurry at present to rebrand and will focus only on locations which have immediate payback in short term,” noted Sood.
Last November, PVR had struck a deal to acquire the entire 69.27 per cent stake held by the promoters of Cinemax India for Rs 395 crore ($71 million). The deal made PVR the largest multiplex chain operator in the country, pipping Inox-Fame combine and Big Cinemas.
Private equity firm Multiples Alternate Asset Management and existing investor L Capital had together put in Rs 235 crore to part-fund the acquisition.
(Edited by Sanghamitra Mandal)