Alibaba to buy majority stake in Tencent, VC-invested ChinaVision

The acquisition comes as internet giants Alibaba, Tencent and Baidu are locked in a fierce battle to differentiate their business, often expanding into overlapping areas. For example, on Monday, Tencent said it would buy 15% of the second-largest B2C e-commerce site JD.com ahead of its $1.5 billion US IPO, challenging market leader Alibaba.

According to a regulatory filing, Alibaba Investment will buy 12.49 billion new shares of ChinaVision at HK$0.5 apiece, representing a discount of about 20.6% to its previous closing price.

In 2011, Tencent acquired a 8% stakes in ChinaVision for HK$247.8 million. Sequoia Capital holds 12.11% of the company. Upon completion of the deal, shares owned by Sequoia and Tencent will be diluted to 4.84% and 3.2%, respectively.

ChinaVision produces and distributes films, television drama series and media advertising. In the first half of 2013, the group's revenue and net profits surged by 14.4% and 30.1%, respectively, to HK$482 million and HK$133 million. The company was entitled to 30% of the investment return in blockbuster movie "Journey to the West: Conquering the Demon" directed by Hong Kong movie star Stephen Chow.

ChinaVision and Alibaba said they will establish a strategic committee to explore future opportunities in online entertainment and media-related areas.

Alibaba, which is expected to go public this year, has made several purchase and investments over the last few months. It bought the NASDAQ-listed AutoNavi Holdings, valuing the VC-backed digital mapping and navigation firm at $1.58 billion. In January, it teamed up with Yunfeng Capital to buy a 54.3% stake in pharmaceutical data provider CITIC 21CN, a Hong Kong-listed subsidiary of Chinese conglomerate CITIC Group, for HK$1.33 billion.

It also invested in New York-based luxury e-commerce site 1stdibs with a $15 million Series C investment. Furthermore, it led a $100 million Series B round of funding for China-based online education site TutorGroup, with participation from Temasek Holdings and existing backer Qiming Venture Partners.

Goldman Sachs advised Alibaba in the transaction, while Reorient Financial Markets served as the financial adviser for ChinaVision.

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• Topics
• Greater China
• Media
• M&A
• China
• Media
• Sequoia Capital
• TMT
• Alibaba Group