PVR Ltd, the country’s largest multiplex chain operator, has agreed to freeze expansion in its key markets of Noida and Gurgaon for three years as part of a revised deal cleared by India’s anti-trust regulator to acquire developer DLF Ltd’s cinema exhibition business.
PVR has also told the Competition Commission of India (CCI) it will not open new screens or acquire any existing ones in the South Delhi area of the national capital for five years from the date of completion of the merger with DLF’s DT Cinemas, according to the regulator’s order approving the deal earlier this month. This commitment excludes DT Cinemas’ multiplex in Chanakyapuri area of South Delhi which is likely to open this year, it said.
The company also told the regulator that it has agreed to scrap an agreement to set up 15 screens at the upcoming Garden Galleria shopping mall in Noida and a multiplex with seven screens at the Airia mall in Gurgaon.
PVR agreed to take these measures after the CCI asked the company to shed some assets as a pre-condition to approving the acquisition to ensure the combined entity doesn’t have a monopolistic position in the two cities.
In Noida, PVR would operate 30 screens in Noida and DT Cinemas would run seven by 2018 of the total 69, the CCI order said. In Gurgaon, PVR and DT Cinemas together operate 24 of the total 38 screens, it added. PVR and DT cinemas together operate 27 of 34 screens in South Delhi.
PVR has also agreed to cap prices of tickets and food products and beverages at its theatres in South Delhi. The revised deal approved by the CCI also excludes seven screens of DT Cinemas in South Delhi.
PVR had agreed to acquire DT Cinemas for Rs 500 crore in June last year. However, the deal hit a roadblock when the CCI asked PVR to offload some assets to address competitive concerns.
DLF operates the exhibition business under its subsidiary DLF Utilities. It has 29 screens with around 6,000 seats across eight properties in Delhi NCR and Chandigarh. After the merger, PVR will run its 524 screens and also operate 32 screens of DT Cinemas at 114 multiplexes in 47 cities.
This was PVR's second attempt at buying DT Cinemas. It had earlier inked a deal to buy the multiplex chain in 2009 in a cash-and-stock deal worth Rs 50 crore. However, the deal was scrapped in February 2010. This is also PVR's second acquisition in the past four years. In 2012-13 it had acquired Cinemax.
In the past three years, the exhibition business in India has gone through a consolidation. Inox bought Satyam for Rs 182 crore in July 2014 while Carnival Cinemas has acquired property developer HDIL's multiplex unit for Rs 110 crore, besides buying out Anil Ambani-owned Big Cinemas for about Rs 700 crore.
Mexico's Cinepolis acquired Fun Cinemas from Essel Group for about Rs 480 crore. It is now the fourth-biggest player in the business. Also, Mumbai-based KSS Ltd, formerly known as K Sera Sera Ltd, sold a significant minority stake in its subsidiary K Sera Sera Miniplex Ltd.
On May 31, DLF said in a stock-exchange filing that it has signed an amended agreement with PVR to sell most of its cinema exhibition business for a revised consideration of Rs 433 crore. The company added that it has received Rs 333 crore from PVR and will get the remaining after completion of certain conditions.
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