Alibaba Pictures (01060) subsidiary plans to acquire all shares of Jiali Culture and 70% of all shares of Dongyang Meira

According to Zhitong Finance App News, Alibaba Pictures (01060) announced that on November 13, 2023, the company's indirect wholly-owned subsidiary Zhonglian Shengshi entered into a sales agreement I with Jiali Culture, Huayi Entertainment and Huayi Brothers. Zhonglian Shengshi agreed to buy and Huayi Entertainment agreed to sell all of the shares in Jiali Culture (along with related shareholder loans), at a total cost of RMB 350 million, subject to the terms and conditions of the sales agreement I (i.e. acquisition matter I). At the time relevant to the conclusion of the sale agreement I, the acquisition I did not constitute a notifiable transaction for the company.

On July 23, 2024, Beijing Alibaba, an indirect wholly-owned subsidiary of the company, entered into a sales agreement II with Dongyang Mira, Beijing Meira, Hainan Mera and Huayi Brothers. Beijing Alibaba agreed to buy and Huayi Brothers agreed to sell 70% of Dongyang Mera's total shares at a total cost of RMB 350 million, subject to the terms and conditions of the sale agreement II (i.e. acquisition matter II).

According to reports, all of Jiali Culture's shares were owned by Huayi Entertainment just before delivery I. After the delivery of I, Kerry Culture became an indirect wholly-owned subsidiary of the company. Kerry Culture is mainly engaged in property holding. The property includes 8 commercial units and 29 parking spaces in the Huayi Brothers headquarters building (a multi-purpose office building at No. A2 Xinyuan South Road, Chaoyang District, Beijing). The property has 9871.67 square feet of saleable area, of which 1919.11 square feet are currently leased to the company's independent third party to operate a bathing and leisure center, while the remaining 8167.61 square feet are currently on the rental market for office use.

Dongyang Meira is a limited liability company established under Chinese law. Huayi Brothers and Feng Xiaogang own 70% and 30% of the shares respectively. Dongyang Meira is mainly engaged in the production and investment of movies, TV series and online series. After delivery II, Beijing Alibaba and Feng Xiaogang will own 70% and 30% of Dongyang Meira's shares, respectively. Dongyang Meira will become a subsidiary of the company, and its financial results will be incorporated into the group's financial statements.

According to the announcement, the property is located in a prime location in Chaoyang District, Beijing, and is expected to bring stable rental income to the group, thereby strengthening the group's cash flow. Furthermore, the Group sees the property as a long-term investment and hopes to obtain long-term capital gains from the property.

Dongyang Mera is mainly engaged in the production and investment of movies, TV series and online series, similar to the Group's main business. Furthermore, Feng Xiaogang, a well-known Chinese film director, is also a shareholder of Dongyang Meira. As part of the acquisition, the Group will also enter into a cooperation agreement II with Feng Xiaogang, which stipulates future cooperation plans and strategic cooperation rights relating to film production. Therefore, the acquisition is in line with the Group's strategy and business interests, and is expected to further expand the Group's core business segment and expand the Group's footprint in the Chinese entertainment industry.