Mergers & Acquisitions

HMV changes hands for HK$408 million

China 3D Digital issuing 1.12 billion shares to AID Partners, will change name to HMV Digital China Group

PUBLISHED : Tuesday, 15 March, 2016, 3:04pm
UPDATED : Tuesday, 15 March, 2016, 5:19pm

HMV, Hong Kong’s largest music and DVD retailer, has changed hands, with China 3D Digital Entertainment paying AID Partners Capital HK$408 million for an 81.63 per cent stake, the two companies said in filings to the stock exchange on Tuesday morning.

Growth Enterprise Market-listed film-maker China 3D Digital will issue 1.12 billion shares to AID Partners, representing 22.59 per cent of the enlarged issued share capital of China 3D Digital. Upon completion of the deal and shareholders’ approval, the company’s name will be changed to HMV Digital China Group.

GEM-listed AID Partners, a buyout firm focused on the film and entertainment business, will become China 3D Digital’s single largest shareholder. It reported a gain on the disposal of approximately HK$224 million before tax and transaction costs.

We have successfully repositioned the brand and expanded the operations of HMV within a short period of time
Kelvin Wu, AID Partners

The deal was announced before the market opened and prompted China 3D Digital shares to rise 12 per cent to 51 HK cents by the close. AID Partners shares rose 1.4 per cent to close at 21.7 HK cents.

When British retailer HMV went into administration in January 2013, AID Partners bought HMV’s operations in Hong Kong and Singapore and the rights to develop the brand on the mainland and in Taiwan and Macau.

AID Partners chief executive and executive director Kelvin Wu King-shiu said China 3D Digital was a pioneer in the media and entertainment industry in Hong Kong and in mainland China.

READ MORE: ‘HMV is getting an upgrade in Hong Kong’: Buyer explains how he turned around failing business in two years and why vinyl is back

“China 3D Digital shall further accelerate the vertical integration process of HMV and grow into one of the very few entertainment platforms, which has the combined characteristics of local culture and international perspective; thus maximising its overall profitability,” Wu said.

“From the investment perspective, we have successfully repositioned the brand and expanded the operations of HMV within a short period of time from its verge of bankruptcy.

“Holding a major stake of China 3D Digital allows AID Partners to be further involved in the media and entertainment universe and to continue to enjoy the investment returns from HMV.”

HMV Asia chairwoman Li Mau, Wu’s wife, will become executive director and co-chairman of China 3D Digital.

READ MORE: Kelvin Wu defends HMV’s position in Hong Kong amid continued challenge from iTunes, Spotify

China 3D Digital chairman Stephen Shiu said the deal would add value to its film and artist management business. The company has produced films and television shows such as Delete My Love, and manages artists including Julian Cheung Chi-lam.

“HMV is an international brand which has been rooted in Hong Kong for the past 22 years,” Shiu said. “It has become an integral part of the collective memory of Hong Kong people. In the Hong Kong market alone, HMV has accumulated a large crowd of stable and loyal customers.

“China 3D Digital is keeping a close eye on any possible business initiatives to capitalise on the high-end international entertainment platform of HMV. For example, we may utilise the physical HMV stores and online channels to promote our film and television programmes or dispatch our artists’ updates. These synergies are immense and beyond imagination.”