April 9 (Bloomberg) -- Wasu Media Holding Co. surged by its daily limit after agreeing to sell a 20 percent stake to Alibaba Group Holding Ltd. Chairman Jack Ma and fellow billionaire Shi Yuzhu for 6.54 billion yuan ($1.1 billion).
Shares of the cable TV company jumped 10 percent to 28.09 yuan at the close of trade in Shenzhen. The board approved a plan to sell 286.7 million new shares to Ma and Shi’s Hangzhou Yunxi Investment for 22.80 yuan each, the company said in a filing to the Shenzhen Stock Exchange yesterday. The deal needs approval from shareholders and regulators, according to the statement.
Wasu, one of the first in China to receive an Internet TV license from the government, has been working with Alibaba to produce set-top boxes since July last year. Wasu operates cable TV and broadband networks in Hangzhou, where it’s based, and provides new media services to clients elsewhere in China with a network of 20 million subscribers, it said in a statement.
Yunxi, set up on April 2 for the transaction, plans to build Wasu into an “integrated media group,” according to the statement.
The investment will help Wasu accelerate expansion in new media and big-data services, fund purchases of cable TV networks to achieve economies of scale and cut the company’s debt-to-asset ratio to 28.2 percent from 64.3 percent as of Dec. 31, according to its filing to the Shenzhen exchange.
Shi, chairman and founder of Giant Interactive Group Inc., is planning to sell Shanghai Goldpartner Biotech Co., a dietary supplements maker he founded more than a decade ago, people with knowledge of the matter said last month.
Alibaba is also based in Hangzhou.
Alibaba said in March that it would invest about $692 million in Intime Retail Group Co., owner of department stores and supermarkets, as China’s biggest e-commerce operator integrates online and offline shopping.
The two companies will form a venture in China, using shopping malls, department stores and supermarkets to develop an online-to-offline business as Alibaba competes with Tencent Holdings Ltd. and its WeChat instant messaging application.
Alibaba said March 16 it will start the process for an IPO in the U.S., without specifying how many shares it would sell or at what price. The company has been valued by analysts by as much as $200 billion.