 "DLF sells DT Cinemas to PVR for Rs 500 cr")
Over the last few years, DLF is on a spree to sell off its business in non-core areas to reduce its high debt, which once reached Rs 23,000 crore. DLF’s debt stood at Rs 20,965 crore in the quarter ended March .
Saurabh Chawla, senior executive sirector, DLF, said, “The deal is in line with our strategy to focus on our core business and divest non-core businesses or assets. It will also provide the management a more focussed approach for enhancing value especially in our retail mall business.”
Among the major non-core sale transactions are divestment of stake in Aman Resorts to founder Adrian Zecha for Rs 1,650 crore, NTC land in Mumbai to the Lodhas for Rs 2,700 crore and an Information Technology Special Economic Zone in Pune to private equity firm Blackstone for Rs 810 crore. It also sold off part of its wind energy business.
DLF has been under the ire of Competition Commission of India (CCI) as well. It was imposed with a penalty of Rs 630 crore after a group of up-end DLF apartment owners at Belaire (Gurgaon) petitioned on the company’s alleged misuse of its market leader position. The company has challenged the order in the Supreme Court.
Currently, DT Cinemas operates 29 screens with about 6,000 seats across eight properties in the National Capital Region and Chandigarh. In the next 12 months, DT Cinemas proposes to add 10 new screens at two properties in NCR. The proposed transaction will be subject to statutory and regulatory approvals and satisfaction of customary conditions precedent. PVR already has a strong presence in northern India and this acquisition will add to its might in the region.
Nitin Sood, group chief financial officer, PVR, said, "This deal consolidates PVR's presence in the north, a greater contributing factor in the decision was the locations of the properties. We are focussed on premium locations with differentiated customer experience, and that is what DT Cinemas has to offer. The exhibition business of DLF is debt free and being Ebitda positive, the acquisition of these screens will also help us improve our margins."
Sood added, "They have prime properties which lend themselves very well to brand PVR.It also helps that they have some of the best mall properties and we will also be getting the 10 new screens that they have planned. All of the existing screens also have potential to scale up in terms of realisation from F&B sales and cinema advertising." The new properties are expected to come up in Noida and Chanakyapuri and will be complete by the end of FY16.
In 2012, PVR acquired Cinemax and is currently in the process of converting the acquired screens and properties to the PVR mould. A similar plan of action is intended for the DT Cinemas properties as well, and it should be done by the second quarter of FY17.
Shardul Amarchand Mangaldas & Co was the legal advisor to PVR and EY India and Luthra & Luthra were financial and legal advisors respectively to DLF.
SLUMP SALE
- DT Cinemas has 29 screens with over 6,000 seats. PVR has 467 screens in 105 properties in 43 cities
- After the proposed buy, PVR have presence in 44 cities with 115 multiplexes and 506 screens
- In Nov 2009, DLF had signed a deal with PVR to sell DT Cinemas, but deal fell through in Feb 2010
2014
July: Inox Leisure acquires Gurgaon-based rival Satyam Cineplexes in a Rs 182-cr deal
December: Carnival Group buys Big Cinemas from Reliance Group for Rs 700 cr, biggest deal in the sector
2015
January: Mexican multiplex chain operator Cinepolis buys Essel Group's Fun Cinemas
January: Network18 exited the business by divesting stake in Stargaze Entertainment to Carnival Films