Cinemax promoters sell stake to PVR for Rs 395 crore
Kanakia family, the promoters of multiplex operator Cinemax India have entered into a definitive agreement to sell their 69.27 percent stake to rival PVR for about Rs 395 crore, the two companies said on Thursday.
November 30, 2012 / 08:35 IST
Moneycontrol Bureau
Kanakia family, the promoters of multiplex operator Cinemax India have entered into a definitive agreement to sell their 69.27 percent stake to rival PVR for about Rs 395 crore, the two companies said on Thursday.The offer price of Rs 203.65 a share is at a 16 percent premium to Cinemax's closing price on Tuesday."To set up each screen costs Rs 2-3 crore, so 140 screens would cost around Rs 300 crore. Also usually screens make losses for initial 1-2 years. Cinemax is already a profit making company. So the deal seems to be fairly valued," Angel Broking analyst Amit Patil told moneycontrol.com.Cinemax shares hit a new high of Rs 184.40 on NSE following the announcement. PVR shares also gained over 15 percent to hit a 52-week high of Rs 274.70.Further, apart from buying the promoter stake, PVR said its board has also approved purchase of up to 26 percent in Cinemax via an open offer to public shareholders.Cinemax operates 39 properties, with 138 screens. It has a strong presence in Western India, and what's particularly important Patil says is that it is present in 14 locations and 45 screens in Mumbai, where average ticket prices are higher and real estate costs are also high.Also Read: How will PVR gain from Cinemax buy?Currently, Inox Leisure and Fame India (Inox bought a majority stake in 2010) together have 256 screens and Anil Ambani owned Big Cinemas , which had lost out in a bitter battle to buy Fame, has 254 screens.PVR currently has around 210 screens and with the acquisition of Cinemax, will become the number one multiplex operator in the country.At 15:15 hrs, Cinemax shares were locked in the 5 percent circuit at Rs 184.40. PVR shares were also up about 5 percent at Rs 248.60. Patil says PVR shares have already run-up around 30 percent in past 1-2 months and so are currently at fair valuations. He has a "neutral" rating on the stock.Don't Miss: Jet Air-Etihad deal to be signed in three months, say sourcesNachiket Kelkar
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