Home / Companies / News /  Inox to acquire Satyam Cineplexes for Rs182 crore

Mumbai: Multiplex and cinema screen operator Inox Leisure Ltd on Wednesday said it has acquired New Delhi-headquartered Satyam Cineplexes Ltd for 182 crore.

The acquisition will expand Inox’s presence to 50 cities, with 91 multiplexes and 358 screens.

Inox said the acquisition of Satyam is part of its strategy to expand its footprint across the country and gives it a significant foothold in northern India.

The acquisition is the third by Inox in less than a decade. In 2007, it acquired Calcutta Cine Pvt. Ltd, heralding the consolidation phase in the multiplex industry. In 2010, it acquired Fame India Ltd.

Multiplex operators have been eyeing more screens, signalling expansion plans in the film exhibition and distribution business.

Early this month, Carnival Films Pvt. Ltd, a Kochi-based company that operates around 75 screens, announced plans to acquire nearly 3,000 more screens over the next three years in India and abroad.

Backed by international agri-commodity trader Advantage Overseas Pvt. Ltd (AOPL), Carnival Films recently bought the multiplex business of Housing Development and Infrastructure Ltd for a little over 100 crore. The acquisition boosted Carnival’s modest screen count of 45 to more than 75.

Reliance MediaWorks Ltd, which runs the Big Cinemas chain, is also scouting for a seller, according to an investment banker who did not want to be identified. Multiplexes account for around 25% of screens in India, according to a March 2014 report by KPMG.

The Indian movie industry is a distributor-driven market and more screens add to the bargaining power of distributors. They also spawn deals with retailers for selling food in cinemas, according to multiplex operators.​

Grant Thornton Advisory was the financial adviser and Khaitan and Co. the legal adviser to Inox, while BMR Advisors acted as their financial adviser and Luthra and Luthra Law Offices was Satyam’s legal adviser.

Inox shares closed at 152.25, down 1.20% on BSE on Wednesday, while the benchmark Sensex index closed at 26,087.42 points, up 0.37%.

On 28 May, Inox owned 79 properties in 43 cities with 310 screens. With the latest acquisition, it will be present in 50 cities with 91 halls and 358 screens. Though it will continue to be the second largest firm in this segment, it has entered the northern territory where it did not have a strong presence.

In the year ended March, Inox reported annual profit after tax of 36.93 crore compared with 18.45 crore a year ago. Revenue grew 14.15% to 877.77 crore from 768.91 crore.

At the end of March rival PVR Ltd has 97 properties with 421 screens. Big Cinemas has 516 screens spread across India, the US and Malaysia.

“The equity value of the deal is 182 crore and Inox has taken over the debt of Satyam of around 60 crore, thus the total transaction value stands at 240 crore. IFCI Ltd, which had invested in Satyam, will also be paid from this capital," said a person familiar with the transaction. He requested anonymity.

Jehil Thakkar, head of media and entertainment at KPMG, said consolidation will continue in the cinema exhibition space and two or three players would end up dominating the business.

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