Shares in PVR surged nearly 18 per cent to Rs 300 on the BSE. Cinemax shares gained over 4 per cent today.
Brokerage IDFC maintained its "outperform" call on PVR post the deal announcement. PVR will reach screen presence of 500 screens in next two years. Its revenues will be in excess of Rs 1,100 crore, controlling box office collections of 30 per cent, IDFC said.
PVR has paid premium valuation for Cinemax, the brokerage added, saying Cinemax enterprise value per screen of Rs 4.8 lakh is at 17 per cent premium to PVRs current EV per screen. Cinemax has got a fair exit from the business, it added.
On Thursday, PVR said it will acquire 69.27 per cent stake In Cinemax India at a price of Rs 203.65 for an all cash consideration of Rs 395 crore. The acquisition is being carried out through PVR's wholly owned subsidiary, Cine Hospitality Pvt. Ltd. (CHPL).
The acquisition will be followed by an open offer to the public shareholders of Cinemax India for an additional 26 per cent stake for cash.
PVR has also announced a preferential issue of equity of 1,06,25,205 shares at a price of Rs 245 per shares amounting to Rs 260 crore to promoters, existing investor - L Capital and new private equity investor - Multiples Alternate Asset Management (Multiples). Under the preferential issue of equity shares in PVR Limited, Multiples will invest an amount of approximately Rs 153 crore, L Capital would invest approximately Rs.82.3 crore and promoters would invest approximately Rs 25 crore into PVR.
Post the above dilution, both Multiples Private Equity and L Capital would own approximately 15.8% stake each in the company and the Promoters will hold 32% stake in the Company.
Axis Capital Limited acted as the Investment Banker, Axis Finance acted as Arrangers for acquisition finance and Amarchand & Mangaldas & Suresh A Shroff & Co. acted as the Legal advisor to PVR for this transaction. Trust Investment Advisors Pvt. Ltd. acted as the Investment Banker and Wadia Ghandy & Co. acted as the legal advisor to Cinemax for this transaction.