Alibaba Pictures Group Ltd., a film production and investment firm, saw its Hong Kong-traded shares soar by 37 percent after its parent firm Alibaba Group Holding Ltd. revealed its plans to inject some of its entertainment assets into the struggling film unit, Bloomberg reported.
Earlier this week, Chinese e-commerce giant Alibaba said it is considering integrating its Taobao Movie online ticketing website and its Yulebao movie production crowdfunding platform into Alibaba Pictures, the Hollywood Reporter said.
Taobao and Yulebao both began operations last year.
Alibaba Pictures Chairman Shao Xiaofeng said that his company will assess the proposal and "other possible transactions in light of its new business model." Shao said the deal is not yet final.
"The company plans to use innovative models to create a demand-driven entertainment experience," Shao said.
"This new strategic direction calls for an integrated approach toward the funding, production, marketing and distribution of entertainment content and a further expansion of the company's business," he added.
Alibaba Group said that the business integration proposal "complements Alibaba Pictures' existing lines of business and helps realize Alibaba Group's vision of making digital media entertainment available to our customers anywhere anytime," the Wall Street Journal reported.
In addition, Alibaba believes that the business integration will help strengthen its e-commerce business and would create a new business model for moviemaking, according to a source familiar with the proposed deal.
Alibaba Pictures revealed its full-year earnings last week. The firm posted a loss of 417 million yuan ($67.2 million) and its revenue dropped by nearly 67 percent.
You Na, an analyst at ICBC International Research Ltd., said that it makes sense for the e-commerce giant to consolidate all its film-related assets into one unit.