Hong Kong-listed ChinaVision Media Group will acquire China Entertainment Media Group for HK$2.02 billion, the company said in a filing to the Hong Kong stock exchange.
ChinaVision, a content producer and distributer for television, cinema and mobile devices on the mainland, plans to issue 5 billion new shares to fund the acquisition.
The share offering represents 242 per cent of its existing issued share capital. The firm will also issue 619.4 million new shares, at 40 Hong Kong cents each, to a unit of Tencent Holdings, the mainland's largest internet firm in terms of market value.
The issue price is a premium of 8.7 per cent to the stock's average closing price for the past 30 trading days.
The plan has to be approved by existing shareholders, and the company has proposed a special general meeting 'as soon as practicable'.
Dong Ping, chairman of ChinaVision, said Tencent's participation would boost shareholder confidence, and that they were likely to vote in favour of the share offering even though their holdings would be diluted. 'The strategic investment of Tencent shows their recognition of our value,' Dong said.
Tencent's internet platform would help market ChinaVision's media content, while ChinaVision would provide quality content to Tencent's internet users.