China Literature goes to the movies; investors see a flop

Tencent’s e-book unit buys Chinese film studio for $2.3 billion. It's betting on turning its huge stockpile of stories into big-screen blockbusters, but the deal is a horror show for its share price.

China Literature took a big step towards its ambition of becoming a full-fledged media and entertainment company on Tuesday as it agreed to acquire privately-held production house New Classic Media for Rmb15.5 billion $2.3 billion.

The Hong Kong-listed company, best known as the operator of Tencent’s electronic book platform QQ Reading, is betting on production of movies and TV series as its next growth driver.

But the deal, along with a slowdown in the growth of e-book revenue, sent investors rushing to the exit on Tuesday. China Literature’s shares plunged 17%, its biggest daily decline since its initial public offering in October...

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