India’s two largest cinema chains PVR Ltd and Inox Leisure Ltd. have agreed to merge their operations to create the country’s biggest film exhibition company.

On Sunday, local media reports said that the boards of PVR and Inox had agreed to terms for an all-stock merger, subject to regulatory approval. The new entity is set to be called PVR Inox Ltd., with existing cinemas to maintain their respective branding and all-new cinemas after the merger to be branded PVR Inox, PVR said in a statement to local media.

Should the merger be completed, PVR said the new company would be looking to expand its presence in India, aiming for new PVR Inox branded multiplexes in tier 2 and tier 3 cities in the country.

The merged entity would be, by quite some distance, the largest exhibition company in India, with a combined 1,546 screens across 341 properties in 109 cities to account for 40 percent market share. The next biggest operator would be Carnival Cinemas, which had approximately 450 screens in 2019, and further back is Cinepolis India, with 381 screens, also in 2019.

The COVID-19 pandemic has hit India’s once-thriving movie-going market hard, with repeated nationwide lockdowns disrupting business on top of additional costs associated with health and safety compliance adding more pressure to profits. Moreover, the pandemic has seen a greater shift and acceptance by Indian consumers for streaming services debuting everything from Bollywood blockbusters to smaller indie fare.

In statements to Indian media, PVR and Inox management acknowledged the difficult operating environment for their companies and said they hoped greater scale could allow the merged entity to take advantage of any bounce back in movie-going in the country.

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