Two of our largest multiplex movie cinema chains have decided to merge and become one giant company.
PVR Limited and INOX Leisure Limited will combine to create the single biggest chain in India with over 1,500 screens across 109 cities.
So now it's almost certain that you'll end up watching a movie at PVR.
PVR has been pretty dominant already across most of India with most moviegoers preferring them in the North, South and West.
It was the East where they weren't doing as well and were getting beaten by INOX, but now they've figured out a way around that.
It will be an all-stock transaction, which means no cash will exchange hands.
INOX will merge into PVR to create an entity called PVR Inox Limited and the shareholders of Inox Leisure will get 3 shares for every 10 held in INOX.
Ajay Bijli, the chairman and MD of PVR will become the MD of PVR INOX.
The promoters of PVR will own a 10.6% stake in the combined entity, while INOX promoters will hold 16.7%, and both will be the co-promoters of the new company with equal representation on the board of directors.
One thing you all may be thinking is won't this deal get flagged by our regulators considering PVR and INOX are the biggest chains we have?
The Competition Commission of India (CCI) still has to give its approval. But the numbers are pretty damning. Once merged, PVR INOX will be more than 3x larger than the nearest competitor – Cinepolis which has 417 screens.
Technically though, the merger does not require CCI approval.
It is below the limit of Rs 1,000 crore. However, that's only because the revenues of both companies have taken a huge hit due to Covid-19. So a serious case of some 'Mauke pe chauka' here.
It will be interesting to see how each stock reacts once markets open, but experts feel it might be a better deal for INOX.
We do also wonder whether the CCI buts in on this.