HONG KONG (Reuters) - China's largest e-commerce company Alibaba Group Holding has agreed to buy a controlling stake in ChinaVision Media Group Ltd for HK$6.24 billion ($804 million) as competition in the Internet sector heats up.
A unit of Alibaba has agreed to buy 12.49 billion new shares, representing 60 percent of the enlarged share capital of ChinaVision at HK$0.50 apiece.
That represents a discount of about 20.6 percent to its previous stock close, the supplier of television program services said.
ChinaVision, which has a market capitalization of $686 million, said the net proceeds of the deal would be used for general working capital and for investments when opportunities arise.
ChinaVision and Alibaba will establish a strategic committee to explore future opportunities in online entertainment and media-related areas.
Trading in shares of ChinaVision, which was suspended on February 25, will resume on Wednesday.
Tencent Holdings' stake in ChinaVision will be diluted to 3.2 percent from 8 percent on completion of the issue.
($1 = 7.7619 Hong Kong Dollars)
(Reporting by Donny Kwok; Editing by Edwina Gibbs)