Fame India will merge with INOX Leisure, after brushing aside the Anil Ambani-led Reliance Group’s threat to own the multiplex chain.
The boards of the two companies on Friday gave an in-principle approval for the proposed merger of Fame India, along with subsidiaries Fame Motion Pictures, Big Pictures Hospitality Services and Headstrong Films, with INOX Leisure.
They also authorised Pavan Jain and Deepak Asher, directors of the company, to appoint merchant bankers to conduct necessary valuation of shares to determine the share exchange ratio.
The combined entity will be India’s largest multiplex chain with 257 screens. At present, the Reliance Group’s BIG Cinemas leads the pack with 252 screens. PVR Ltd has 162 screens, while Cinemax has 141 screens.
Shares in Fame India jumped 4.98 per cent to close at Rs 47.40, while INOX ended at Rs 51, up by 2.20 per cent. The Sensex rose 1.63 per cent to close at 16,949.83. At the end of March, INOX had a 73.14 per cent stake in Fame India, while the Anil Ambani-promoted Reliance Capital (R-Cap) owned 22.38 per cent.
The takeover battle for Fame began in February 2010, when R-Cap launched a hostile bid for a 62.08 per cent stake at Rs 83.40 a share, 63.5 per cent higher than INOX’s open offer of Rs 51. INOX had acquired a 43.28 per cent stake in Fame Cinemas from its promoter, Shravan Shroff, for Rs 66.48 crore in an all-cash deal. R-Cap accused Fame of rejecting its higher offer price in favour of INOX and petitioned to the Securities and Exchange Board of India that the deal was against the “protection of the interest of minority retail shareholders.”