Reliance ADAG Sells Multiplex Business to Carnival Cinemas

BIG Buy: Reliance ADAG Sells Multiplex Business to Carnival Cinemas

Reliance BIG Cinemas from the Reliance MediaWorks Ltd will soon be owned by Carnival Cinemas. Reliance ADAG has decided to cash in on its multiplex business and this changed the face of the Indian cinema industry.

Biggest Multiplex Deal

In further consolidation of the multiplex industry, ADAG or Anil Dhirubhai Ambani Group firm Reliance MediaWorks has signed a clear and definitive agreement with Carnival Cinemas for selling its multiplex business. This is the largest ever deal within the multiplex business and the sale in question “is in furtherance of Reliance Capital's stated objective of focusing purely on its core financial services businesses, significantly reducing exposure to non-core investments in the media and entertainment sector, and reducing overall debt,” Reliance said in a statement issued to the media.

Deal Value Not Disclosed

Companies agreeing to the deal have not disclosed the amount at which it was reached. Reliance Capital aims to reduce its financial leverage by INR 700 crore and the deal excludes real estate under the ownership of RMW at IMAX Wadala as well as other properties intended for separate monetisation for a total estimated value of INR 200 crore, according to the statement.

Reliance Capital will also have the option for acquiring the pre-IPO minority stake in Carnival Cinemas at a suitable discount following eventual listing of the firm. “I am thankful to Mr. Anil D. Ambani, Chairman, Reliance Group, for his support to a first generation entrepreneur like me, and in facilitating this transaction with Carnival Cinemas in preference to other leading cinema chains. We are targeting to achieve 1,000 screens by the year 2017, and look forward to the continued support of Reliance Group in our future growth,” Carnival Chairman Shrikant Bhasi was quoted as having said.

About BIG Cinemas

Reliance ADAG BIG Cinemas has over 258 screens in the nation and along with its existing 50 screens, and this will make Carnival the third biggest multiplex operator. Currently, PVR is the leader in the industry with close to 500 screens while Inox is pegged at second rank with 358.

The deal follows several others in this space such as Inox’s acquisition of Satyam Cineplex for INR 240 crore and Carnival’s purchase of HDIL Broadway Cinemas. Carnival Group is from South India while Reliance Capital is the parent firm of Reliance MediaWorks operating one of the largest Indian cinema chains namely BIG Cinemas. Sam Ghosh, CEO, Reliance Capital was also quoted as saying “We are delighted to begin a long term relationship with the rapidly growing Carnival Group, through the sale of the multiplexes business of Reliance MediaWorks to them.”

Big Plans for the Future Too

Reliance Capital has announced plans to focus core business and is in the process of enacting minority investments as well such as offloading 16% stake in Yatra.com for around INR 500 crore as per media reports.