PVR to acquire DLF DT Cinemas

Realty major DLF plans to sell ‘DT cinemas’ and is in talks with potential buyers including PVR Ltd, as part of its strategy to exit non-core businesses and cut huge debt of over Rs. 20,000 crore. This would be PVRs second attempt to acquire DT Cinemas after 2009, when it entered into definitive agreement with the DLF group.

India currently has 1,700 multiplex screens with PVR leading the market with 454 screens while the second ranked Inox owns 361 screens. DT Cinemas currently operates 29 screens in National capital Region of Delhi and Chandigarh. It will ramp up its operations to 39 screens by 2016. It is one of the significant players in the Delhi and the NCR with 18 screens in Delhi, eight in Gurgaon and another three in Chandigarh.

In December, Carnival acquired Anil Ambani Big Cinemas for an enterprise valuation of a little over Rs 710 crore. Inox Leisure, acquired Delhi based Satyam Cineplexes for nearly Rs 240 crore. Inox expanded its presence to 50 cities, with 91 Multiplexes and 358 screens. Housing development and Infrastructure sold its Multiplex business Broadway Cinemas to Carnival Cinemas, and Mexican Multiplex chain Cinepolis bought Fun Cinemas.

Though DLF Assets are located at prime places and command premium, the deal value is on the higher side in comparison to other deal that included in the recent past, indicating that the space getting more competitive. 

Reliance Infrastructure acquires Pipavav Defence

Reliance Infrastructure Ltd., formerly known as Reliance Energy and before that as Bombay Suburban Electric Supply is India’s largest private sector enterprise power utility. It is part of the Reliance Anil Dhirubhai Ambani Group, one of India’s largest conglomerates. The company is the sole distributor of electricity to consumers in the suburbs of Mumbai. It also runs power generation, transmission, and distribution businesses in other parts of Maharashtra, Goa, and Andhra Pradesh.

Reliance Infrastructure, through its subsidiary Reliance Defence Systems Pvt. Ltd., will acquire 130 Million equity shares from the promoters of Pipavav Defence at a price of Rs 63 per share. After the acquisition, Reliance Defence Systems will make an open offer to acquire an additional 26% stake in the company from public shareholders at Rs 66 per share. JM Financial Institutional Securities Ltd will be the sole financial advisor and the manager to the open offer.

Pipavav Defence is the India first world class integrated Defence production, ship building and offshore infrastructure company. It is the country’s first private sector company to get the license and contracts to build frontline warships for Indian Navy. It has one of the world’s largest infrastructure facilities. It is spreads over 841 acres of land on the Gujarat coast and has India’s largest and one of the world’s largest dry docks, measuring 662 meters in length and 65 meters in width.

India is one of the largest spenders on defence equipment. According to government estimates, the cumulative defence budget, consisting of capital and revenue expenditure, has increased 32% between fiscal 2011 and fiscal 2014 to Rs 2.04 Lakh crore. About 70% of India’s defence requirements are met through imports and the rest through local production by state owned companies.

Big Cinemas sold to Carnival

Big cinemas is a division of Reliance MediaWorks Ltd and a member of Reliance ADA Group is a theatre chain with over 515 screens in India, US, Malaysia, and the Netherlands. As of July 2014, the company has 280 screens in India. The company accounts for 10% t0 15% of box office contributions of large movies.

On Monday, December 15, 2014, Anil Ambani led Reliance Group has sold its multiplex business to South India based Carnival Group in the largest ever deal in this space. The transaction will reduce Reliance Capital overall debt by Rs 700cr and is part of Reliance Capital’s strategy to exit minority investments. The deal will make Carnival the third largest multiplex operator with nationwide presence and over 300 screens.

The firms did not disclose the exact value of the deal. The deal stuck between Carnival Cinemas and Reliance MediaWorks, will exclude IMAX Wadala and some other properties worth Rs 200cr. Reliance capital is the parent firm of Reliance MediaWorks, which operates one of the largest cinema chains, under the brand ‘BIG CINEMAS’ with over 250 screens in India.

Carnival group is targeting to achieve 1000 screens by the year 2017. The transaction between the two will be completed within the current financial year. Reliance capital will retain an option to acquire a stake in pre-IPO stage at an appropriate discount whenever carnival goes a listing. Reliance capital had recently announced its plans to focus on core business and is in the process of encashing its minority investments. The company is in talks with 2-3 international investors to sell its 16 percent stake in leading travel portal Yatra.com for an estimated 500cr.