Multiplex leaders PVR Ltd and INOX Leisure Ltd on Sunday announced their merger in an all-stock deal that will create India’s largest film exhibition company operating 1,546 screens across 160 properties in 72 cities.

The amalgamation comes at a time the multiplex industry is looking at a turnaround as Covid-19 cases have drastically reduced across the country amid stiff competition from Over The Top platforms.

INOX will merge with PVR and its shareholders will receive three shares of PVR for every 10 shares held by them in INOX.

The merged entity will be named PVR INOX Ltd with the existing multiplexes called PVR and INOX. New cinemas opened after the merger will be branded PVR INOX.

The merger proposal was approved by the boards of both the companies on Sunday.

Ajay Bijli, who is the chairman and managing director of PVR, will be the managing director of the merged entity, while Sanjeev Bijli an executive director.

Pavan Jain, the non-executive chairman of INOX, will be the non- executive chairman of the board. Siddharth Jain would be appointed as non-executive, non-independent director of the combined entity.

A joint statement issued by the companies said the promoters of INOX will become the co-promoters in the amalgamated entity along with the existing promoters of PVR.

The board of directors of the merged company would be reconstituted after the merger. The board will have 10 members with both the promoter families having two seats.

The promoters of PVR will hold a 10.62 per cent stake in the merged entity, while the promoters of INOX will have 16.66 per cent holding.

The Bijlis at present hold a little over 17 per cent in PVR. The promoter holding in INOX stands at around 44 per cent.

The companies said the combination would augur well for the growth of the multiplex industry and ensure tremendous value creation for all stakeholders, including customers, real estate developers, content producers, technology service providers, the state exchequer and the employees.

The merger is expected to counter the challenges posed by the various OTT platforms and the after-effects of the pandemic. The plan is to expand in smaller towns.

“This is a momentous occasion that brings together two companies with significantly complementary strengths. The partnership of these two brands will put consumer at the centre of its vision and deliver an unparalleled movie going experience to them,” Ajay Bijli, CMD, PVR said .

“The film exhibition sector has been one of the worst impacted sectors on account of the pandemic and creating scale to achieve efficiencies is critical for the long term survival of the business and fight the onslaught of digital OTT platforms.’’

On Friday, th shares of INOX settled at Rs 470.50 clocking gains of 6.28 per cent on the BSE while PVR closed around 2.18 per cent higher at Rs 1,827.60. Based on these closing prices, the merged entity will have a market cap of around Rs 16,900 crore.

“The coming together of two iconic cinema brands, which are driven by passion, is certainly the most historic moment in the Indian cinema exhibition industry,” Siddharth Jain, director – INOX Leisure said.

“As we head into the industry’s revival amidst headwinds, this decisive partnership would bring in enhanced productivity through scale a deeper reach in newer markets and numerous cost optimisation opportunities and continue to delight cinema fans with world-class experiences and landmark Innovations,’’ he said.