New Delhi: Cinema chain PVR Ltd on Monday called off the acquisition of DT Cinemas Ltd, part of real estate firm DLF Ltd, as the deadline for the completion of the deal lapsed.
In a statement to the Bombay Stock Exchange, PVR said “the acquisition agreement has been terminated” because the two companies hadn’t been able to reach a consensus even after a 60-day extension of the date of closing the deal. The deadline lapsed on Monday.
“Certain paperwork and legalities relating to some of the properties that we would have acquired through the deal did not come to us,” said a senior executive at PVR, who did not want to be named. “These were required to be cleared out before the deal could be sealed. Therefore, without these, we cannot take the deal forward.”
No show: A PVR hall at Select CityWalk in New Delhi. DLF had offered PVR rights to be the anchor hall partner in all future projects. Ramesh Pathania / Mint
The executive added if DT Cinemas could “present a case and proper documentation that is favourable to our shareholders, we will consider it again”.
PVR is open to “other business opportunities, and will look at acquisitions that make business sense for us”, he said.
The development comes as the second jolt for India’s multiplex industry.
Last week, Reliance MediaWorks Ltd, a part of the Reliance-Anil Dhirubhahi Ambani Group, or R-Adag, accused Fame India Ltd of violating takeover norms in selling a controlling stake to rival theatre chain Inox Leisure Ltd. Reliance MediaWorks claimed it had offered a better deal.
Inox had earlier secured a controlling stake in Fame after it bought a 43.3% stake from the cinema chain’s promoters and an additional 7.21% stake later, taking its total shareholding in Fame to 50.48%. An open offer for 20% will follow in April.
Completion of the deal with DT Cinemas would have given PVR 26 screens on top of the 108 it operated in November, when the agreement was reached. As part of the deal, DLF group agreed to offer exclusive rights to PVR to be the anchor cinema hall partner in its future mall projects.
Ajay Bijli-promoted PVR was to issue about 2.5 million shares to DT Cinemas, representing 10% of its share capital, and pay Rs20.2 crore to fund the acquisition.
“The deal would’ve have made PVR a formidable force in the multiplex space in India, especially in the north,” said Nikhil Vora, managing director of financial services firm IDFC-SSKI Securities Ltd. With the deal falling through, PVR would have to evaluate its growth strategy again, he added.