Can you tell me about the proposed merger of PVR Ltd and Inox leisure?

It was a merger that was long waiting to happen, especially after the constraints imposed on multiplexes by the pandemic. Late in the week, PVR Limited and INOX Leisure approved and announced an all-stock swap merger. There will be no cash flowing either ways and the deal will entirely be by exchanging shares of one company for another. Once the approvals from shareholders and regulators come through, Inox will merge into PVR.

In terms of corporate structure, PVR will be the surviving structure while Inox will cease to exist as a corporate structure. Therefore, under the terms of the merger (once approved by the shareholders and regulators), the shareholders of Inox will get shares of PVR as per the swap ratio decided and agreed upon. Consequently, the Inox promoters will become co-promoters of the combined entity, which will be called PVR Inox Ltd.

Ajay Bijli, the current managing director and CEO of PVR Ltd will drive the combined entity. Even as the companies will be combined, the company will retain the individual brands for the time being. For instance, both the screens will continue with individual branding i.e. PVR will remain PVR and Inox will remain Inox screens. PVR operates 871 screens and INOX 675 screens currently. This is a good bet on the revival of the multiplex sector.

The big bet is that in the post-pandemic recovery, there would be a lot of revenge consumption and entertainment would be one of those. Multiplex companies have incurred huge losses in the last two years amidst lockdowns. PVR with its larger balance sheet may still survive, but Inox was clearly struggling. This was the best exit option for Inox Leisure and would at least ensure that their business interests sustain much longer.