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Carnival gets the green signal to acquire Big Cinemas

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NEW DELHI: The acquisition by the Carnival Group of the Big Cinemas chain owned by Anil Ambani’s Reliance MediaWorks has been cleared by the Competition Commission of India (CCI).

It is learnt that the South India-based Carnival Group had offered $112 million for Big Cinemas in December 2014. 

In January this year, Carnival also acquired Stargaze Entertainment’s cinemas. The company now has a total of 330 screens, making Carnival India’s third largest multiplex operator. The Inox group has 361 screens while market leader PVR has 454.

 

The proposed transaction will reduce Reliance Capital's overall debt by Rs 700 crore and is part of Reliance Capital's strategy to exit minority investments.



CCI said in its order that "the proposed combination is not likely to have an appreciable adverse effect on competition in India."



Under the agreement executed on 14 December, 2014, the film exhibition business of Reliance MediaWorks along with the food and beverages business, which is a part of the film exhibition business (but excluding all forms of film exhibition through Internet, mobile or television of Reliance MediaWorks), would be transferred to Cinema Ventures Private Ltd (CVPL) - a subsidiary of Reliance MediaWorks.

 

As many as 88 cinemas (72 multiplexes and 16 single screen cinemas) operated by Reliance MediaWorks having 238 screens are proposed to be transferred by Reliance MediaWorks to CVPL.

 

Following this, Carnival will acquire 98 per cent stake in CVPL whereas a director of Carnival will acquire the remaining two per cent shareholding.

 

"It is noted that pursuant to the proposed combination, there are overlaps between Carnival, Stargaze and Reliance MediaWorks with respect to the multiplexes in seven cities namely Indore, Mumbai, Dindigul, Ghaziabad, Dehradun, Raipur and Ajmer," the order said.

 

However, CCI observed that in Indore, Mumbai, Ghaziabad, Dehradun, Raipur and Ajmer, "competition concerns may not arise as there are other multiplexes in these cities exercising competitive constraint on the acquirer pursuant to the proposed combination in terms of the pricing and services offered within the cinemas."

 

In the case of Dindigul, it was stated that "it is unlikely that the combination would result in increase in prices or would have an adverse impact on the amenities provided to the consumers in Dindigul."

 

The deal struck between Carnival Cinemas and Reliance MediaWorks will exclude Imax Wadala (Mumbai) and some other properties worth Rs 200 crore.

 

Reliance Capital is the parent firm of Reliance MediaWorks, which operates one of the largest cinema chains, under the brand BIG Cinemas.

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