TENCENT Holdings Ltd., e-commerce billionaire Jack Ma and movie studio Huayi Brothers Media Corp. will pool their assets and create a Hong Kong-listed company to develop films and entertainment for China and abroad.

    Tencent, Huayi and Ma’s Yunfeng Capital have made a HK$547 million (US$70.6 million) offer to buy a controlling stake in a shell company called China Jiuhao Health Industry Corp.

    If successful, they intend to use the shares of what has been a retirement-home developer to create a media and cultural business and produce original content. First up is a slate of 10 live-action films and three animated features to be created in conjunction with unidentified U.S. production houses.

    The deal marks another rare alliance between the co-founder of Alibaba Group Holding Ltd. and Tencent founder Pony Ma, whose rivalry spans a decade. It comes as Chinese companies expand aggressively into online services to stream video games, TV and movies and court Hollywood studios.

    “In China, content is definitely king,” said Peter Schloss, managing partner of CastleHill Partners LLC, a Beijing-based advisory and investment company. “Everyone’s trying to differentiate not through tech but through the content they have.”

    Investors including Yunfeng, a fund co-founded by Jack Ma, have agreed to buy 6.84 billion shares of Jiuhao at HK$0.08 apiece, a more than 90 percent discount to its closing price.

    The bidders said in a statement last week that they had taken into account a drop in Jiuhao’s net assets in relation to an unrelated deal.

    Under the deal, which needs shareholder approval, Huayi will hold 18.17 percent of Jiuhao, Tencent will own 15.68 percent and Yunfeng’s Confidex will hold 5.12 percent.

    The business is going public through a shell company instead of a traditional initial public offering (IPO) because of restrictions in China’s finance industry. The government has only recently restarted the IPO process after a five-month suspension, during which companies found alternative ways to get publicly traded equity.

    (SD-Agencies)