Hurray! Holding Co, a China-based artist development and wireless music company, announced on Monday it would merge with Enlight Media, an entertainment production company.
Hurray! also said profit fell in the latest quarter, sending its American Depositary shares down $0.67, or 16.88 percent to $3.30. on Tuesday on the Nasdaq Stock Market.
Under the merger agreement, Enlight's shareholders will receive Hurray! common shares equivalent of 15.74 million American Depositary Shares, representing a 42 percent stake in Hurray!, in exchange for all the outstanding shares of Enlight.
China has room for a huge domestic media giants such as Time Warner or News Corp. in the US, and we intend to fill that position,'' said Changtian Wang, CEO and President of Enlight.
If all price targets are met, Enlight shareholders could own up to 65 percent of the combined company.
The combination is expected to close in the first quarter of 2008. Hurray expects the buyout to increase its profits next year, and said Hurray Enlight Media will be one of the largest entertainment companies based in China.
Hurray! reported third-quarter quarter results on Monday, posting a net loss of $11.5 million, or 53 cents a share. Revenue fell 23.9% to $13.6 million, below the $15.7 million mean estimate of three analysts polled by Thomson Financial, and below the company's own guidance of $15.5 million to $16.5 million.