QUBE CINEMA TECHNOLOGIES AND UFO MOVIEZ TO MERGE
The Boards of Directors of UFO Moviez India Limited and Qube Cinema Technologies
Private Limited approved a Composite Scheme of Arrangement and Amalgamation,
amongst UFO, Qube, Qube Digital Cinema Private Limited (“Qube Digital”), Moviebuff
Private Limited (“Moviebuff”) and PJSA Technosoft Private Limited (“PJSA”). 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 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.
Merger, Advantages & Development
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. With UFO
MPEG4 & Qube MPEG2 technology used for the transmission of content into e-Cinema,
it is expected that the combined entity will develop and deploy both D-Cinema and
e-Cinema systems, that incorporate the best features of the multiple technologies
available to the company.
Both UFO, with 4,000 advertising screens, and Qube, with 3,300 advertising screens,
have large advertising networks. And because of the strong geographical strengths
the merged business will be able to offer a pan India in-cinema advertising network
covering over 7,300 screens, significantly improving the overall value proposition
for clients. The two companies also have complementary strengths in terms of client
base, presenting attractive cross-sell opportunities.
Further, the proposed merger would bring about synergies of operations and benefits
of scale by minimizing the duplication of administrative functions, combining some
infrastructural requirements and unifying legal and regulatory compliances.
In addition, Qube has developed Qube Wire, which is a self-service, single-window
system for global theatrical distribution. With a simple but comprehensive user
interface, distributors can manage their DCP assets, assign territorial rights
and have their content and keys delivered to any theatre in the world. Theatres can
manage their own digital cinema system details and access their Universal Inbox on
the Qube Wire service as well. This service is currently in the process of
commercialization but is already in operation on a limited-scale serving select
clients. UFO, along with its screen network in India, also has a network of screens
overseas. The combined network, post-amalgamation, will allow faster monetization of
Qube Wire and other IP based Qube products, both within India and internationally.
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.
Comments from Founders & Management Team
Sanjay Gaikwad, Founder and Managing Director of UFO Moviez India Ltd., said, “We
are excited to combine our business with such a strong partner. Qube has not only
built a strong digital cinema and in-cinema advertising network in India but has
also developed interesting technology products relating to film business for global
application. The combined Company would have a stronger position in India’s digital
cinema distribution and in-cinema advertising industry. The combination will bring
together capabilities, talent, strong processes of both Companies and we together
look forward to creating value for the entire Cinema value chain.”
Senthil Kumar, Co-founder of Qube Cinema Technologies Pvt. Ltd., said, “We are excited to
partner with UFO and believe that the combination of the proven business models of the
two companies would be extremely beneficial. Together, we will create a robust network
offering digital cinema and in-cinema advertising services. UFO’s strengths combined
with Qube’s strong technology focus would position the combined entity to deliver
long-term growth at a faster pace. With extraordinary reach and execution capabilities,
we are bringing together two world-class organizations to deliver much more, thus
maximizing value for all stakeholders.”
Prashant Purker, Managing Director & CEO of ICICI Venture., said, “We believe the
combination of UFO and Qube would be synergistic and value accretive for all
stakeholders. We are pleased to have acted as a catalyst in this transaction as
a partner and financial investor in the combined entity.”