Together with introduction of Tencent as a strategic investor, the move creates a leading media entertainment company.
ChinaVision Media Group Limited (“ChinaVision”), together with its subsidiaries, announced Friday that it has entered into a Sale and Purchase Agreement in which the Group has conditionally agreed to acquire the entire issued share capital (the “proposed acquisition”) of China Entertainment Media Group Limited (“CEMG”).
Furthermore, the Group has entered into a Subscription Agreement (the “subscription”) with a wholly-owned subsidiary of Tencent Holdings Limited (“Tencent”), and introduced Tencent as a strategic investor.
The proposed acquisition and subscription creates a leading media entertainment company with proven capabilities to produce and distribute a diverse portfolio of premium and differentiated multimedia content. The total consideration of the proposed acquisition is approximately HK$2,016.3 million. The consideration will be satisfied by the issue and allotment of 5,040,750,000 new shares to CEMG’s shareholders. In addition, as part of the subscription, ChinaVision will issue 619,400,000 new shares (“subscription shares”) to Tencent for a total consideration of approximately HK$247.8 million. The subscription shares represent approximately 8.0% of the issued share capital of ChinaVision as enlarged by the proposed acquisition and subscription.
ChinaVision is an integrated media entertainment company and is principally engaged in the film, television, print media, and mobile new media businesses in China. CEMG is a fast-growing media entertainment company that was invested by Sequoia Capital during its early stages and is principally engaged in the production and distribution of films, television drama series and satellite television programmes and television advertising in China. CEMG works with a team of well-recognised directors, screenwriters, actors and actresses to originate movies through its director workshops as well as through a strategic cooperation with China Film Group Corporation (“CFGC”). It has also entered into a ten year cooperation agreement with the Gansu Provincial Film and TV Broadcast Group to exclusively operate the television advertising and content programming segments of the Gansu Satellite Television Network and Gansu Local Television network, according to a ChinaVision report.
The proposed acquisition represents a significant milestone for the Group. Through the proposed acquisition ChinaVision hopes to:
In addition to the proposed acquisition, the Group has entered into a Subscription Agreement with a wholly-owned subsidiary of Tencent. As part of the subscription, the Group and Tencent have, in conjunction with the subscription, entered into a Framework Strategic Cooperation Agreement (the “cooperation agreement”). Tencent is a leading provider of integrated Internet services with the most Internet users in China. The Group believes that this strategic cooperation with Tencent will give the Group additional resources to promote its content and access to various new media platforms including Instant Messaging QQ, web portal QQ.com, Tencent online video platform, the QQ Game platform, the multi-media social networking service Qzone and wireless portal.
Under the cooperation agreement, the Group and Tencent plan to collaborate in the following areas:
The subscription is not only an opportunity to create a constructive collaborative environment for all parties involved but also a way for the Group to further enhance its capital base. The Group intends to use the proceeds from the subscription to improve its financial strength and support general working capital needs. After the proposed acquisition and subscription, the Group aims to fully integrate its diversified suite of content offerings and platforms in print, television, mobile and online media and become a leader in China’s media entertainment industry.
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