The merger will lead to a significant increase in value proposition of UFO Moviez's in-cinema advertisement business, Urmil Shah at IDBI Capital said.
UFO Moviez' shares witnessed a jump of almost 9% on Thursday over the buzz of its merger plans with Qube Cinema Technologies. The stock surged as much as 10.4 per cent to Rs. 478.75, its biggest intraday percentage gain since January 23.
The company had said on Wednesday it would merge with Qube Cinema Technologies Pvt Ltd.
UFO Moviez in a release said, "The Boards of Directors of UFO Moviez India Limited and Qube Cinema Technologies Private Limited, at their meetings held today (November 1), approved a Composite Scheme of Arrangement and Amalgamation, amongst UFO, Qube, Qube Digital Cinema Private Limited, Moviebuff Private Limited and PJSA Technosoft, pursuant to the provisions of Section 230 to 232 and other relevant provisions of the Companies Act, 2013."
Sanjay Gaikwad, Founder and Managing Director, UFO Moviez India in a release 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".
The merger will lead to a significant increase in value proposition of UFO Moviez's in-cinema advertisement business, Urmil Shah at IDBI Capital said.
UFO Moviez, a digital cinema distribution, will have over 98% market share post merger in terms of virtual print fee (VPF) revenue, the analyst added.
The stock remains on IDBI's high conviction buy with a target price of Rs 640. Up to Wednesday's close, the stock had risen about 5% this year.
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