BIG Cinemas lines up suitors for Rs 800-crore deal

BIG Cinemas, a 100-per cent subsidiary of Anil Ambani-led Reliance Capital, has lined up three suitors for a Rs 800-crore deal on the lines of the merger agreement that Reliance MediaWorks (RMW) had inked with global media and entertainment giant Prime Focus Limited in July.

According to sources, Carnival Films Private Limited, a South India-centric company, has emerged as the front runner for the deal while PVR Limited and Inox Leisure Limited are also in the race.

Reliance ADAG had in a gamechanging move for the industry signed an agreement for the merger of the global film and media services business of Reliance MediaWorks with Prime Focus. The combined revenues of the two firms worked out in excess of Rs 1,800 crore and included operations in India, Los Angeles, London, Vancouver, Singapore and Beijing.

The deal had entailed an equity infusion of Rs 240 crore at Rs 52 per share into Prime Focus by RMW and the promoters of Prime Focus in equal proportion.

Big Cinemas owns 500 screens of which 258 are in India while the rest are in the US and Malaysia. The company was hived off from RMW at the time of the Prime Focus deal and made a 100-per cent subsidiary of Reliance Capital, the financial services company of the Anil Ambani Group.

Sources disclosed that the new move to strike a deal with Carnival Films is expected to be modelled on the same lines.

If Big Cinemas' proposed deal comes through, it would be the third in the movie exhibition business in recent months as multiplex operators seek to consolidation to increase their bargaining power with film producers and distributors so that they get a bigger slice of the box office receipts in India's whopping Rs 9,200-crore movie industry.

Inox Leisure, India's second-largest multiplex operator, acquired Delhi-based Satyam Cineplexes for nearly Rs 240 crore paying Rs 182 crore in cash and taking over its debt in a deal that expanded Inox's presence to 50 cities with 91 multiplexes and 358 screens.

Similarly, Housing Development and Infrastructure Limited sold its multiplex business Broadway Cinemas to Carnival Cinemas. PVR had acquired Cinemax a couple of years ago.

According to industry sources, very few new malls have come up due to the economic slowdown, which is limiting the number of fresh screens that can be brought into operation. Most of the big players are therefore seeking consolidation in operations in order to take advantage of the economies of scale to rake in higher profits.

THE BIGGER PICTURE

>> Big Cinemas wants to sign a deal on the lines of the merger agreement that Reliance MediaWorks (RMW) had inked with Prime Focus Limited in July

>> Carnival Films has emerged as the front runner for the deal while PVR Limited and Inox Leisure Limited are also in the race

>> Big Cinemas was hived off from RMW at the time of the Prime Focus deal and made a 100-per cent subsidiary of Reliance Capital, the financial services company of the Anil Ambani Group

>> If the deal comes through, it would be the third in the movie exhibition business in recent months

>> Inox Leisure, India's second largest multiplex operator, acquired Delhi-based Satyam Cineplexes for nearly Rs 240 crore paying Rs 182 crore in cash and taking over its debt in a deal that expanded Inox's presence to 50 cities with 91 multiplexes and 358 screens

>> Similarly, Housing Development and Infrastructure Limited sold its multiplex business Broadway Cinemas to Carnival Cinemas

(In association with Mail Today)