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NEW DELHI - India's two largest multiplex firms said on Sunday they would merge to create a giant cinema operator with more than 1,500 screens across 109 cities as the entertainment industry recovers from the COVID-19 pandemic.

PVR and INOX Leisure said the merger, which is subject to regulatory approvals, would help both companies improve efficiency, reach newer markets and optimise cost.

"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," PVR Chairman Ajay Bijli said in a press release.

Over-the-top, or OTT, platforms such Netflix, Amazon's Prime Video and Disney have made deep inroads in India, where the pandemic ravaged a film industry known for song-and-dance spectacles watched by millions.

PVR is India's largest multiplex chain with more than 850 screens, followed by INOX Leisure with about 650 screens.

The merger follows a two-year period when most theatres were shut due to COVID-19 restrictions.

(Reporting by Devjyot Ghoshal, Editing by Rupam Jain and Edmund Blair)