Inox reels in 43.28% of Fame for Rs 66 crore

Inox Leisure Ltd, the film exhibition company, on Wednesday bought 43.28% stake in Fame India Ltd for Rs 66.48 crore.

The entire stake of Fame’s promoter Shroff family was acquired through a block deal on the Bombay Stock Exchange (BSE) in an all-cash deal.

“The transaction is entirely funded by Inox’s promoter company, Gujarat Fluorochemcials Ltd, as a shareholder loan. This acquisition shall be followed by an open offer to acquire a further 20% stake in Fame for cash, as per Securities and Exchange Board of India’s regulations,” Inox told the BSE.

Post acquisition, Inox will have 55 multiplexes with 204 screens and a total seating capacity of 57,891 seats. Inox currently has 30 properties with 109 screens and a seating capacity of 31,401 seats.

Fame also has subsidiaries such as Big Picture Hospitality Services —a food business joint venture, Headstrong Films —a film production business, and Shringar Films—a film distribution business.

The deal brings Inox closer to BIG Cinemas which is currently the largest player with over 240 screens.

PVR Ltd, the third-largest player, has struck a deal to acquire 26
screens operated by the DLF subsidiary DT Cinemas taking its overall capacity to 134 screens.

Deepak Asher, director, Inox Group, said the company’s objective was to be a significant player in the Indian multiplex space and redefine the movie going experience in India. “Over the next few months, we will evaluate the full benefits of integration and consolidation to drive competitive advantage across the value chain and consider our strategic options in accordance with the regulatory guidelines,” he said.

The Fame top management will continue to oversee the operations till the open offer is concluded.

However, once Inox acquires majority stake, there is a possibility
of a reshuffle in the manpower. “As per the takeover code, we will not control Fame till the public offer process is completed, and hence, we have some time to work this out,” Asher said.

Another company official said while operational staff will certainly get absorbed, there could be changes in the mid- to top-level management positions.

“Those holding positions in the similar function areas will have to be re-looked and there are possibilities of layoffs,” the official said.
Salil Pitale, executive director of investment banking with Enam Securities, said there are obvious reasons for companies in the same business to pursue merger and acquisition. “Besides economies of scale, the companies get to work out a better cost structure and entry into new markets which is very crucial,” Pitale said. Inox had earlier acquired Calcutta Cine Pvt Ltd from Bengal Ambuja, adding 9 multiplexes.