Alibaba Group on Monday said it will increase its stake in Hong Kong-listed Alibaba Pictures, a move which will give Alibaba a controlling stake in the firm.
Alibaba, which currently owns a 49% stake in Alibaba Pictures, will increase their stake to 51%. The move will be done through the issuing of 1 billion new shares from Alibaba Pictures to Alibaba at HK$1.25 per share, at a total value of HK$1.25 billion (US$160 million).
China’s movie market is expected to take over as the largest market in the world. For the first quarter of this year, the Chinese movie market overtook North America for the first time, with bigger debuts seen in China for big-budget Hollywood productions compared to the US and Canada, the Motion Picture Association of America said in a report.
Alibaba Pictures was created to capitalize on the appetite for films for the Chinese market, but it has not been producing the great results it had expected.
Founded in 2014 and listed in 2016, Alibaba Pictures operates under Alibaba’s digital media and entertainment business. For last year, the movie production company’s losses grew to US$165 million.
With the controlling stake, there will be more integration between Alibaba Pictures and the group’s services, Alibaba said.
Responding to the deal, Alibaba chief executive Daniel Zhang said: "The proposed share purchase is a vote of confidence in Alibaba Pictures, and we will continue to invest resources and take full advantage of our ecosystem to help Alibaba Pictures tap into the promising growth prospects of China’s film industry."
Alibaba Pictures’ chairman and chief executive Fan Luyuan added: “As an internet film and TV company, we can leverage the group’s edge in big data technology and e-commerce and enhance cooperation with other Alibaba’s digital media and entertainment businesses such as Youku, Damai and Alibaba Literature.”