PVR and DLF-owned DT Cinemas have called off the acquisition talks that were on for over two months. The decision came after the two companies were unable to agree on certain contours of the deal.In an interview with CNBC-TV18, Ajay Bijli, CMD, PVR Cinemas confirmed the development and outlined the reasons, and what it means for PVR.
Here is a verbatim transcript of the interview sourced from moneycontrol.com
Q: This deal was signed on the November 13. You already sort an extension but expire today. Tell us why the deal did not go through?
A: We signed the understanding and that is the reason why we informed the stock exchange and everyone. On the November 13, we signed the document. But in all these documents there are conditions precedent, which are important to both parties. So 60 days were there before the long stop date was to expire.
Unfortunately, from DLF's side they were unable to meet the conditions precedent. And then again we had a meeting when all this speculation was going on and we met them and we extended the date further to basically today, 15th February. And still there doesn’t seem to be any movement to meet the conditions precedent, which are all related to lease hold premises being primarily transferred in our name.
So if the leases are not transferred then obviously we are unable to book the revenues and we do not know what we are paying for. So basically there is the price and everything, PVR was fully committed to whatever was agreed earlier. So all that speculation is of course incorrect.
It was that the properties which are running had to transferred into PVR’s name, only then can we run them as our properties. So that did not happen at all. There doesn’t seem to be any indication from DLF’s side to transfer them in our name. So that is what has happened. So therefore it is better to communicate that the deal is not going to go through.
Q: Since this is largely on account of lease hold premises not being converted, is there any possibility of a revival of the deal? Will you give DLF more time or is this a closed chapter?
A: Being in this space and talking to somebody whose activity is non-core, we would like to review it. But for some time we would like to now let it be because a deal is a good deal when both parties are very keen and both want to move forward.
So I think we have given enough time to this and it has been going on for nine-ten months now. So to be fair it is better to now cool off for a little while. And of course we would like to pursue and review it later because it is a perfect fit we felt. They are developers, it is not their core activity and from our point of view it is a great inorganic growth opportunity.
Q: You said the deal goes through if both parties are keen on it. Are you not keen or is DLF not expressing that keenness on this deal?
A: We are very keen. We have always been very keen. As I said that we are a company who is on a growth mode and would love to go forward. But if those conditions precedent do not get met then I am compromising on what is in the best interest of our shareholders and investors.
So we are very keen but it’s just that they are unable to meet those conditions precedent, which are vital for this deal to get consummated.
Q: Any other acquisition targets that you are looking at this point in time and how much of a setback will this be?
A: There is nothing specific. But as I said we are on a growth mode, we have a brand, we have the appetite, and we have the funds to grow. India is a market which can do with high quality cinema exhibition facilities and I believe PVR can provide in all humility a good experience to people, an unparalleled experience.
So we are going to be looking at all organic and inorganic opportunities, but only do inorganic if it really fits the bill. It has to be the right fit otherwise that can have a counterproductive impact on the company’s growth plans. But luckily as I said organically there is plenty happening.
