Chinese actors watch films on their mobile phones during a break in the filming in Hengdian, China, on Aug. 10, 2015. (Photo : Getty Images)
China’s major Internet rivals Alibaba and Tencent are joining the group bidding to acquire film studio and distributor Bona Film Group Ltd. after it delisted from the NASDAQ Stock Market.
Alibaba Pictures Group Ltd., the film arm of Alibaba Group Holding Ltd., announced on Tuesday that it will join other investors to purchase Bona, which received a privatization proposal in June earlier this year. Bona, which lists billionaire magnate Guo Guangchang as one of its backers, is a major producer and distributor of films across China.
The proposed deal values Bona at around $1 billion. Alibaba Pictures, which is listed at the Hong Kong Stock Exchange, said it will spend $86 million in exchange for a 10-percent stake in Bona, while Tencent has yet to reveal details on its share terms. The deal is expected to close during the second quarter of 2016.
In June, a group including a vehicle called the Uranus Connection and Chinese investor Xie Zhanshan offered to buy Bona's American depositary receipts at $13.70 each.
After several investments into film studios, ticketing software and other film-related businesses, analysts said the Bona deal marks cash-rich Alibaba's renewed foray into China's lucrative film and TV industry.
Alibaba Pictures said that Bona is one of the key players in China's filmmaking sector and has performed well not only in China but also in overseas markets.
"By teaming up with Bona, we hope to build up an ecosystem that can cover the entire industrial chain of movie and television sector," the company said in a statement.
Huang Guofeng, an analyst with the Beijing-based Internet consultancy firm Analysys International, told China Daily that Alibaba Pictures does not have any experience making movies until now.
"By investing in or forming alliances with leading film studios, Alibaba Pictures is looking to improve its filmmaking skills and boost its status in the country's booming movie industry in a relatively short time," Huang said.
More importantly, Alibaba Pictures can integrate its current business of online ticketing and crowdfunding movies with the traditional filmmaking industry, Huang added.
Bona CEO Yu Dong admitted that the Internet is going to change the way the movie industry operates.
"China's film studios will be working for the country's Internet trio BAT (stands for Baidu, Alibaba and Tencent)," he said.
"Last year, China's box-office receipts surged 34 percent to $4.8 billion, while in the United States and Canada, it shrank by 5 percent to $10.4 billion," said Chen Shaofeng, vice dean of the Institute for Cultural Industries at Peking University. "After delisting from the NASDAQ, I think Bona wants to be relisted in China, where valuations are much higher. It will be a good investment for both Internet companies."
