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Tencent takes Huayi Bros. stake

Companies plan multi-level co-operation

Giant Chinese Netco Tencent has bought a 4.6% stake in shingle Huayi Brothers for 450 million yuan ($69.3 million), the first step by the Shenzhen-based Tencent to expand beyond its traditional Internet offerings.

Tencent’s business includes the wildly popular QQ instant message service, with 647 million users, along with video, music and e-commerce services. The stake will make the dotcom the biggest single institutional investor in Huayi Brothers.

Tencent and Huayi cooperate on multiple levels with the aim of producing more interactive entertainment content. Tencent hopes that after the initial capital investment, it will start to generate synergies and real integration.

“We hope to establish a tight relationship with Huayi Brothers, to try more new things together in the combined area of film, TV and new media,” said Liu.

Last month, Tencent announced it was setting up a 500 million yuan ($77 million) war chest to invest in the film and TV biz.

Wang Zhongjun, chairman of Huayi Brothers, said: “I believe the cooperation will bring integration in the industry to a new higher level.”Huayi Brothers is a force to be reckoned with in China’s entertainment business. It launched an IPO on the Nasdaq-style Growth Enterprise Market of the Shenzhen Stock Exchange in 2009, reported B.O. worth 1.6 billion yuan ($250 million) last year and accounted for some 30% of the Chinese films in release. One of its stars is China’s most bankable helmer, Feng Xiaogang. It had a monster hot earlier this year with “If You Are the One 2,” which Feng helmed.

“This investment is the first step of our cooperation,” Tencent prexy Liu Zhiping said in a statement.

Huayi’s stockholders have approved the investment.

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