Alibaba, Tencent to Increase Stakes in Huayi Brothers to 8% Each
Huayi Brothers, 11/19/14
Film and TV production firm Huayi Brothers (300027.SZ) announced today strategic partnerships with Chinese e-commerce conglomerate Alibaba Group (NYSE: BABA), internet firm Tencent (0700.HK), and investment firms Ping An Asset Management and China Securities Co., Ltd.
Huayi Brothers' proposal calls for a private offering of an additional 144.986 mln company shares, with Tencent paying RMB 1.28 bln for 51.55 mln shares and Ali Venture Capital, an affiliated investment arm of Alibaba Group, paying RMB 1.533 bln for 61.756 mln shares. With the readjusted value of the stock, Alibaba (Alibaba chairman Jack Ma and Ali Venture Capital combined) and Tencent will each control 8.08% of Huayi Brothers, with both companies acting as Huayi Brothers' second largest shareholder. Ping An Asset Management will also buy 27.39 mln Huayi Brothers shares, and China Securities will purchase 4.29 mln shares.
Alibaba will integrate its crowd sourcing entertainment industry investment platform, Yulebao, with Huayi Brothers film and television projects. Under the deal, Huayi Brothers will open 5-10% of its film production budget to Yulebao investors, with 10 films over the next three years to be featured as investment opportunities on the Yulebao platform. The 10 films will be branded as Huayi Brothers productions. In addition, Huayi Brothers and Alibaba will collaborate on 5 additional film projects.
Tencent has agreed to give Huayi Brothers priority film adaptation rights to content developed by Tencent's game and literature divisions. Tencent, in turn, will have first access to converting Huayi Brothers films into online games, literature or animation. Tencent will be able to contribute 5-10% of production costs for future Huayi Brothers film projects. The two companies plan to co-produce five films over the next three years.
Keywords: M&A television Tencent Huayi Brothers 0700.HK Alibaba Group 300027.SZ film production BABA TV content production adaptation online gaming financial services Ali Venture Capital China Securities Ping An Asset Management
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