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Alibaba Group Holding agrees on majority stake purchase of ChinaVision Media Group in $804M deal

March 12
9:09 AM 2014

Alibaba Group Holding will be acquiring a 60% stake in ChinaVision Media Group Ltd for a price tag of $804 million, Reuters reported.

The shares, which will be bought by an Alibaba subsidiary from ChinaVision's enlarged share capital, will be purchased at a 21% discount or HK$0.50 each from its previous close. With the acquisition, Alibaba will now be able to access bolster its digital entertainment portfolio since it would now have access to TV and movie content, the report said.

Alibaba, Tencent Holdings and Baidu Inc have been busy engaging in a number of deals in their efforts to grow into each other's territory as the world's largest Internet market heats up. Just this week, Tencent said it was purchasing a stake in JD.com, the second biggest online retailer in China-a deal that is seen to target Alibaba's vulnerability in mobile, the report said.

TechCrunch reported that a month ago, Alibaba also offered to acquire AutoNavi Holdings, a mapping firm where it already has a 28% stake, for $1.13 billion. Alibaba also acquired an 18% stake in SinaWeibo last year.

The majority acquisition of Alibaba sent the stock of ChinaVision soaring. The deal intends to retain the platform's existing users and get new ones on board. It came after the e-commerce firm rolled out two new services last year-its Ali TV operating system and its mobile gaming platform. The agreement was also arrived at as Alibaba is readying to go public. An average of estimates from twelve analysts pegged Alibaba's value at $140 billion, Reuters reported. 

A strategic committee will be formed by ChinaVision and Alibaba to look into the possible opportunities that online entertainment and media-related field offers. After the deal, Tencent will see its 8% stake in ChinaVision reduced to 3%, the report said.

Alibaba was advised by Goldman Sachs in the ChinaVision acquisition. Reorient Financial Markets Ltd gave financial advice to ChinaVision, the report said.

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