Almost a year after its announcement, the merger has hit a major roadblock.
In a move to create a monopoly in digital cinema distribution network and in cinema advertising platform, in November 2017 Chennai-based Qube Cinema Technologies and Mumbai-head quartered UFO Moviez announced the merger of their businesses. Even after part of the scheme was approved by the Chennai NCLT bench, the scheme was rejected by the Mumbai NCLT in the last week of January 2019.
We had covered this article in our January 2018 issue and details of the proposed merger are as below.
UFO Moviez India Limited (UFO) is India's largest digital cinema distribution network and in-cinema advertising platform in terms of a number of screens. UFO operates India's largest satellite-based, digital cinema distribution network using its UFO-M4 platform, as well as India's largest D-Cinema network. Their offerings include Digital Cinema System, UFO Framez, Club Cinema, and IMPACT Ticketing Platform. UFO Moviez is listed on BSE.
Qube Cinema Technologies Private Limited (QCTPL) is engaged in the business of providing technology in film, video, and audio, including digital cinema distribution, editing, production and sound.
Proposed Rationale
To give exit to the existing Private Equity Investors in QTCPL, it was decided that UFO and India Advantage Fund S4 I, a fund managed by ICICI Venture Funds Management Company Ltd ("INVESTOR") shall purchase an aggregate of 53.20% of the share capital of QTCPL from these PE Investors.
The promoters of UFO were supposed to continue to be promoters of the combined entity and the promoters of Qube were not going to play the role of promoters of the combined entity.
In case of UFO, post-merger in public shareholding category the promoters of Qube would have had 11.93% stake postmerger and ICICI Venture(non-promoter) would have had a 13.44% stake postmerger.
Prominent/Relevant 0bjections
This story is from the March 2019 edition of M & A Critique.
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This story is from the March 2019 edition of M & A Critique.
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