TVB acquires Ztore, joins forces with Shaw Brothers to invest HK$200m

Television Broadcasts (TVB) and Shaw Brothers will invest HK$200 million to acquire approximately 75% of the issued share capital of Ztore, which owns and operates two eCommerce platforms in Hong Kong, namely ztore.com and neigbuy.com. TVB will own a majority of shares and voting rights in this investment. The total consideration for the acquisition is HK$200,000,000 to be satisfied by HK$70,000,000 in cash and a sum of HK$130,000,000 represented by resources in relation to artistes, television commercial spots and other advertising products on TVB’s free to air and digital platforms.

TVB is engaged in terrestrial television broadcasting and programme production as its core businesses in Hong Kong and distributes content internationally. The company has, in recent years, directed its efforts to monetise through direct-to-consumer businesses including video streaming services and e-commerce alongside traditional advertising services. The COVID-19 pandemic has accelerated shifting to digital lifestyles and online shopping has become a new normal. Big Big Shop, an eCommerce platform owned by TVB, has leveraged “showing on TV and selling in Big Big Shop” model to turn TVB’s audiences into its online customers.

TVB has identified eCommerce as an important engine for future growth. TVB is expected to expand the scale of its e-commerce business by over four times in terms of GMV immediately after this transaction.

This transaction is expected to create significant positive synergistic effects for both TVB and Ztore. TVB will benefit from Ztore’s eCommerce managerial resources to support future growth. The transaction will also accelerate customer acquisitions and GMV for Ztore with the increased promotion on TVB’s channels and platforms. Substantial synergies are expected to be generated from the integration of warehouse management and order fulfilment systems as well as the integration of pickup points network which may form one of the largest in Hong Kong post-transaction.

TVB is expected to expand the scale of its eCommerce business by over four times in terms of GMV immediately after this transaction. The post-acquisition customer base for TVB’s eCommerce business will be enlarged from the current level of 480,000 to over one million. TVB is also expected to benefit from an expanded product assortment and supply chain resources given Ztore’s over 10,000 SKUs, which will further increase user activity and enhance customer experience.

Additionally, substantial synergies are expected to be generated from the integration of warehouse management and order fulfilment systems as well as the integration of pickup points network which may form one of the largest in Hong Kong post Transaction. Furthermore, TVB will benefit from Ztore’s e-commerce talent and managerial resources to support future growth.

The transaction will also accelerate customer acquisitions and GMV for Ztore with the increased promotion on TVB’s channels and platforms.  Under the Listing Rules of Hong Kong Stock Exchange, the Transaction constitutes a discloseable transaction for TVB but is exempt from shareholders’ approval.