HONG KONG (Nikkei Markets) -- Shenzhen-listed film and television company Beijing Enlight Media said it sold its entire 27.64% stake in Chinese production house New Classics Media for 3.32 billion yuan ($524 million) to an affiliate of social-media-and-gaming major Tencent Holdings.
Enlight Media said the company signed an equity transfer agreement on March 10 with Linzhi Tencent Technology -- a company wholly owned by an industry fund set up by Hong Kong-listed Tencent -- to sell its stake in New Classics Media.
New Classics Media had a net profit of 349 million yuan and revenue of 1.67 billion yuan in 2017, according to a disclosure to the Shenzhen stock exchange.
Becoming a major shareholder in New Classics Media "gives Tencent Video more control over its content portfolio long-term and more competitive advantage over competitors," Tencent said in a separate emailed statement on Monday. Founded in 2007, New Classics Media is "one of the few companies possessing top-tier TV drama production capabilities with a successful track record of over ten years, plus a promising film business."
The management teams at Tencent and New Classics Media will discuss how to integrate the latter's business with the broader Tencent platforms, and will enter into a business cooperation agreement when appropriate "to ensure Tencent Video can secure rights to the top TV dramas" produced by the filmmaker, as well as other cooperation rights, Tencent added.
Enlight Media bought the stake in New Classics Media for 829 million yuan in 2013. The stake sold in the latter has a book value of 1.05 billion yuan, allowing Enlight Media to record a one-off investment gain of 2.27 billion yuan, it said.
Tencent shares were up 2.1% by midday in Hong Kong on Monday. Enlight Media shares gained 1.9% in Shenzhen.
-- Amy Lam