Shares of Cinemax India surged in morning trade today after it informed the Bombay Stock Exchange that it in in exclusive talks with multiplex PVR for a potential stake sale.
The share purchase would make PVR India's largest multiplex. PVR currently has around 210 screens.A cquiring Cinemax, which operates 39 properties, with 138 screens, will help PVR scale up and become the largest multiplex company in India
Cinemax India, in a statement said today that "They are engaged in exclusive discussions with PVR Limited for a potential sale of their shares in the Company. However, no definitive agreements have been entered into in this respect."
At 12 am, Cinemax India was trading 2.41 percent higher on BSE at Rs 176.50. The market has already priced in the buy since the stock surged 117 percent in November alone, ever since rumours about the stake sale surfaced.
Shares of PVR, however, were trading about a percent lower at Rs 243, while the Sensex is up 1.21 percent at 18761.
On Friday, the Economic Times had reported that PVR is set to seal the deal this week, where in it would buy the 69 percent stake owned by Cinemax's promoters, Rashesh Kanakia and his family for Rs 500 crore. PVR will buy out minority shareholders through an open offer and delist Cinemax in future.
"It remains to be seen if PVR will merge Cinemax with itself or keep it separate. In case, it does decide to merge Cinemax, then PVR will incur additional costs in renaming and refitting the acquired properties to its standards," Amit Patil, analyst at Angel Broking, told moneycontrol.com.
Updated Date: Dec 20, 2014 20:28 PM