Hurray (HRAY) announced the signing of definitive agreements to make a strategic investment in Huayi Brothers Music Company.

The Huayi Brothers group of companies have a well known brand name in China for movie and music production. Huayi Brothers Music is a subsidiary, which focuses on artist development, music production and offline distribution of music in China. Its portfolio of artists includes some of the most popular singers in China, such as Yu/Quan and Huang Zheng.

As part of the agreement, Hurray will invest a total of $4.3 million in cash for 51% of Huayi Brothers Music. The final consideration payable by Hurray and the respective ownership interests of the shareholders of Huayi Brothers Music are subject to adjustment based on the financial performance of Huayi Brothers Music following the closing of the transaction. The transaction is expected to be accretive to Hurray's earnings per share.

Hurray currently expects the transaction to close before January 31, 2006, subject to required China regulatory approval and other customary closing conditions. Upon closing, pursuant to certain contractual arrangements, Hurray will distribute Huayi Brothers Music's music via wireless and Internet platforms, and Huayi Brothers Music will continue to distribute such music via offline channels, such as music stores.

Commenting on this announcement, QD Wang, Chairman and Chief Executive Officer of Hurray, said, "We are very pleased to announce this strategic investment in Huayi Brothers, which we believe is the best brand name in the entertainment industry in China. We believe that Huayi Brothers Music is especially attractive because its strong market position and comprehensive business operations enable it to attract some of the most popular singers in China."

Mr. Wang continued, "Moreover, music has become the most popular category of wireless value-added services in China, and we expect it to continue gaining in popularity in the future. With this investment and the previously announced partnership with the music business of the Freeland group, we believe that we are building the largest music production and traditional and digital distribution house in China."

"Combining Huayi Brothers's powerful brand name and special music expertise with Hurray's strong digital and mobile production and distribution capabilities, we believe that we are redefining the traditional music industry, and creating a totally new business model in China. We expect that this will provide us with a solid foundation for long-term, sustainable growth," added Zhongjun Wang, founder and General Manager of Huayi Brothers Music.

China eCapital served as financial advisor to Hurray in the transaction.

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