NEW DELHI: For Chennai’s movie-crazed legions, Sathyam is a name that needs no introduction. Through its four decades in existence, the sprawling multiplex chain, later rebranded SPI Cinemas, has woven itself into public consciousness in a way that makes it synonymous with the ‘Chennai movie experience’.
But Sunday marks the end of the road for the chain as an independent movie exhibitor.
India's largest theatre chain PVR Cinemas will take over SPI Cinemas Pvt Ltd for a cash consideration of Rs 633 crore and an issue of equity in PVR to SPI’s owners.
The deal, which values SPI at around Rs 883 crore, will see PVR take a majority 71.7 per cent stake in the company for Rs 633 crore in cash and an issue of 1.6 mn equity shares of PVR Limited constituting approximately 3.3 per cent of the diluted paid up equity share capital.
The acquisition, which has been rumoured for some years now, makes PVR the dominant player in the southern market -- one it has been unable to crack open, in part due to SPI’s dominance.
“The acquisition will make PVR the undisputed leader in the South Indian market and provide an attractive platform for us to expand in that geography, which currently is highly underpenetrated in terms of multiplexes,” said Ajay Bijli, Chairman cum Managing Director, PVR Ltd.
Breaking: PVR finally gets its hands on the south's top theatre chain -- SPI Cinemas. PVR will buy 71.7% of SPI for cash consideration of ₹633 crore. Kiran and Swaroop Reddy to remain associated with the business. @NewIndianXpress pic.twitter.com/juCTrr9n2h— Jonathan Ananda (@JonathanSAnanda) August 12, 2018
“... this combines two proven business models and will create significant value for moviegoers as well as all the stakeholders,” SPI’s Kiran Reddy added.
What about the popcorn?
But, the question plaguing SPI’s fans is whether the brand, its character, customer service and, most importantly, culinary offerings including its celebrated popcorn, will remain unsullied by the take-over.
If PVR is to be believed, the answer is yes. Speaking to TNIE, Nitin Sood, PVR’s Chief Financial Officer, pointed out that post the acquisition, both brands will operate on an ‘as is’ basis with SPI owners Kiran and Swaroop Reddy driving operations at SPI.
“Both Kiran and Swaroop will continue to run the business on the ground. There will be no change in the brand, and no change in the team because they have a much larger presence and are stronger in this market,” Sood said.
As for capital infusion, Sood pointed out that any investments will be funded by SPI’s internal accruals since it is a “highly profitable company”. Pricing at SPI’s screens is also unlikely to be affected by the deal.
--Transaction expected to be closed in next 30 days
-- Merger expected to be completed in next 9-12 months.
-- Post acquisition, PVR’s total screen count will increase to 706 screens across 152 properties and 60 cities, making PVR the 7th largest cinema exhibitor in the world in terms of annual admissions
-- has a presence in Tamil Nadu, Telangana, Andhra Pradesh, Karnataka, Kerala and Mumbai
-- it has 76 screens (68 operational & 8 expected to commence operations soon) across 17 properties & 10 cities.
-- has a signed pipeline of over 100 screens which are expected to be rolled out over the next 5 years.