UFO Moviez spurts after combining biz with Qube Cinema Tech

UFO Moviez India surged 7.32% to Rs 466 at 10:33 IST on BSE after the company announced that board approved combination of businesses of Qube Cinema Technologies with the company.

The announcement was made after market hours yesterday, 1 November 2017.

Meanwhile, the S&P BSE Sensex was up 15.20 points or 0.05% at 33,615.47. The S&P BSE Small-Cap index advanced 116.68 points or 0.66% at 17,813.86, outperforming the Sensex.

High volumes were witnessed on the counter. On the BSE, 66,484 shares were traded on the counter so far as against the average daily volumes of 7,881 shares in the past one quarter. The stock had hit a high of Rs 470 and a low of Rs 449 so far during the day. The stock had hit a 52-week high of Rs 503 on 1 November 2016 and a record low of Rs 316 on 11 August 2017.

The small-cap company has equity capital of Rs 27.60 crore. Face value per share is Rs 10.

The stock has jumped 20.28% in six sessions to its ruling price, from a close of Rs 387.40 on 25 October 2017.

UFO Moviez India said that the boards of directors of UFO Moviez India and Qube Cinema Technologies (formerly Real Image Media Technologies), at their meetings held yesterday, 1 November 2017, approved a composite scheme of arrangement and amalgamation amongst UFO, Qube, Qube Digital Cinema, Moviebuff and PJSA Technosoft.

Qube, Qube Digital and Moviebuff are part of the Qube group whereas PJSA is a wholly owned subsidiary of UFO.

The proposed transaction is being carried pursuant to the scheme on the basis of which Qube's business of providing technology solutions and services in the film, video and audio domains, including digital cinema advertising will be first demerged into Qube Digital and then subsequently merged with UFO pursuant to certain intermediate steps as approved by the boards of directors of the aforementioned companies. The merger ratio based on relative valuation stands at 63.6% for UFO and 36.4% for Qube Digital.

One of the intermediate steps mentioned above will include ICICI Venture (through certain private equity funds managed or advised by them) along with UFO purchasing a stake in Qube Digital from certain private equity investors who have been shareholders of Qube for several years. Qube Digital's shares purchased by UFO will stand cancelled post-merger.

The proposed transaction is expected to further solidify the merged entity's position in India's digital cinema distribution and in-cinema advertising industry. As on 30 June 2017, the combined entity, for its in-cinema advertising platform will have a presence across 7,300 digital screens spread across India with a seating capacity of around 95.5 million per week.

The proposed scheme is subject to the requisite statutory and regulatory approvals.

UFO and Qube are engaged in the business of digital cinema distribution and operate in-cinema advertising platforms. Considering the existing entertainment and advertising market dynamics, the proposed merger of the two companies will lead to robust growth opportunities in India and globally and will create greater value for their respective shareholders.

The combined entity is also expected to leverage ICICI Venture's significant prior experience as a private equity investor in new age businesses, including media and technology.

On a consolidated basis, UFO Moviez India's net profit rose 98% to Rs 14.02 crore on 13.9% growth in net sales to Rs 153.68 crore in Q1 June 2017 over Q1 June 2016.

UFO Moviez India is India's largest digital cinema distribution network and in-cinema advertising platform in terms of number of screens.

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