China's largest e-commerce company Alibaba Group Holding has agreed to buy a controlling stake in ChinaVision Media Group Ltd for $804 million, giving it access to TV and movie content as competition in the world's biggest Internet market becomes increasingly cutthroat.
The pact, which sent ChinaVision's stock surging, comes amid a flurry of deals as Alibaba, social media giant Tencent Holdings Ltd and search engine Baidu Inc seek to expand into each other's turf.
This week Tencent said it was taking a stake in China's No. 2 online retailer JD.com, with the new partnership gunning for Alibaba's Achilles heel - its weakness in mobile.
Alibaba's acquisition of TV and movie content is aimed at retaining current users and attracting more, and comes on the heels of its launch of its Ali TV operating system last July as well as the launch of a mobile gaming platform this year.
ChinaVision and Alibaba said they will establish a strategic committee to explore future opportunities in online entertainment and media-related areas.
Alibaba will, through a subsidiary, buy 60 percent of ChinaVision's enlarged share capital at HK$0.50 apiece, a discount of about 21 percent to its previous stock close.
ChinaVision stock jumped by more than three times in value to around HK$2.27 in early trade. The stock was suspended on February 25 ahead pending an announcement.
Tencent, which had an 8 percent stake in ChinaVision, will see its stake diluted to 3 percent after the Alibaba deal.
The agreement also comes as Alibaba prepares to launch an IPO. The company has been valued at around $140 billion, according to an average of 12 analysts' estimates.
In the deal with ChinaVision, Goldman Sachs advised Alibaba, while Reorient Financial Markets Ltd was the financial adviser for ChinaVision.