Chinese movie ticketing firm Maoyan has announced it is acquiring a stake in celebrity-backed company Huanxi Media for $50m (€44m/£38m).
Maoyan had announced the deal at the time of its recent IPO debut in Hong Kong, which saw its stock slump by 1.1 per cent in early February.
The firm raised around $250m at its IPO launch in January, which was much less than its previous target of $1bn, and is due to spend a fifth of that on its stake in the Chinese production company.
According to documents filed by the two companies, Huanxi will issue new shares to Maoyan at a nominal HK$1.6507 per share, giving Maoyan 7.5 per cent of the company. At that price, Huanxi is valued at $667m.
Under the agreement, Maoyan can co-invest in Huanxi film and TV projects, and the right to be promotional and distribution partner on Huanxi titles. This is important for the firm as it looks to diversify from its movie ticketing arm.
The media firm, which is controlled by directors Xu Zheng and Ning Hao alongside businessman Dong Ping, benefits from the deal by being able to use Maoyan’s platform as an additional shop window for its VOD activities. The documents describe this as a “services entrance on (Maoyan’s) website and an app for (Huanxi’s) new media video contents and services.”