Hurray (HRAY) has announced the signing of definitive agreements to acquire a major interest in the music business of the Freeland Group, which is a group of affiliated companies in China that is engaged in the production and distribution of audio and video media products.
Freeland Music specializes in music production and distribution for its portfolio of artists which includes some of the most popular singers in China, such as Xiangxiang, Yang Chengang and Yang Yi.
In the acquisition, Freeland group will inject the music business into a newly formed company, which upon the closing of the acquisition will be 60% owned by Hurray and 40% owned by Freeland group.
The total consideration for the acquisition is US$7,560,000 in cash. Consideration payable by Hurray and the respective ownership interests of the parties in Hurray Freeland are subject to adjustment based on the financial performance of Hurray Freeland following the closing of the acquisition. The transaction is expected to be accretive to Hurray's earnings per share in 2006.
Hurray currently expects the transaction to close before December 31, 2005, subject to required China regulatory approval and other customary closing conditions. Upon closing, pursuant to certain contractual arrangements, Hurray will distribute Hurray Freeland's music via wireless and Internet platforms, and Freeland group will distribute such music via offline channels, such as music stores.