Leading Chinese movie studio Huayi Brothers Media has finalized its acquisition of a strategic 20% stake in mobile online games company Hero Entertainment. The deal is valued at $288 million (RMB1.9 billion) and makes Huayi the second largest shareholder in Hero.
A preliminary announcement was made last November. The price was determined on a formula of 19 times last year’s net after tax profits. Hero has guaranteed annual profit increases of 20% for the next three years.
The company is mainly engaged in the development and management of e-sports game products as well as organizing and promoting mobile eSports competitions. Hero and Huayi expect to cooperate in film and games and Huayi has been granted right of first refusal in terms of adapting any of the eSports games developed or managed by Hero into films, TV series, web series or other media.
Hero, which recently listed its shon China’s National Equities Exchange and Quotation market, has investors that include Sequoia Capital, Huaxing Fund, ZhenFund and Chinese real estate tycoon Wang Jianlin’s son Wang Sicong. Tianjin Dinuo Investment Management, which owns 44% is its leading shareholder.