IMAGI INT'L (00585) plans to acquire a 67% stake in Skyline VFX for HK$171 million, strategically returning to the digital entertainment and AI media sectors.

IMAGI INT'L (00585) announced that on November 5, 2026 (after trading hours), the buyer, Imagi Venture (No. 1) International Limited (a wholly-owned subsidiary of the Company), and the seller, Chen Changfang, entered into a share purchase agreement pursuant to which the buyer has conditionally agreed to acquire, and the seller has conditionally agreed to sell, the sale shares for an aggregate consideration of HK$171 million. The aggregate consideration will be paid as follows: (i) an amount equivalent to HK$34.2791 million (being the cash consideration) in cash; and (ii) an amount equivalent to HK$137 million through the allotment and issue of consideration shares under a general mandate. At completion and immediately thereafter, the entire issued share capital of the target company, Skyline VFX Ltd, will be owned approximately 33% and 67% by the seller and the buyer respectively. As an incentive for the seller to achieve the target revenue of the target group for each of the financial years ending December 31, 2027, December 31, 2028 and December 31, 2029 of not less than RMB120 million, RMB168 million and RMB218 million respectively, pursuant to the share purchase agreement, the Company will issue warrants to the seller at completion, which entitle the holders, subject to the terms and conditions set out in the warrant instrument and at any time during the exercise period of the relevant warrants, to subscribe for such number of warrant shares based on the ratio of the actual audited consolidated revenue of the target group for each target period to the target revenue. The group has gradually scaled down its computer-generated imagery business since the late 2000s, and by January 2016, the board resolved to develop an integrated financial services business. Financial services and investments subsequently became the group's core strategy. Following the recent change in the Company's shareholder base and the appointment of new management, the board has realigned and updated the group's long-term vision and strategy. The board has decided to capture emerging opportunities in digital production and AI-generated media and entertainment, enhance its existing digital entertainment business and return to the Company's original area of expertise. The Chinese film and television drama market has undergone significant changes in the past few years. The development of generative AI is transforming content development, animation production, visual effects and distribution methods, and AI-generated content has gained broad market acceptance and popularity in China. The board believes that these developments, together with the expanding scale of the entertainment markets in China and globally, are providing the group with significant long-term opportunities to re-establish digital entertainment as its core business. To refocus on the digital entertainment business, the board has decided to implement this strategy through the acquisition of the target company, which is an established player in the industry with an experienced team. The target company is one of the market leaders in visual effects production for Chinese film and television, with a track record of nearly ten years. Notable projects include the influential feature films "Creation of the Gods I: Kingdom of Storms", "Panda Plan", "Under One Person" and "The Battle at Lake Changjin", as well as the widely acclaimed television series "Three-Body". The target company has also begun adopting state-of-the-art AI technology in its development and production. The acquisition is the first step in the group's gradual rebalancing of its focus toward an AI-empowered media and entertainment business. The group will not exit the financial services business in the short term and intends to implement this strategic transformation in a prudent and orderly manner, aiming to manage execution risk and maintain business continuity. The directors believe that the acquisition will enable the group to: accelerate the adoption of AI-empowered content development and production capabilities through an established operating platform and an experienced team; develop new revenue streams in the AI-empowered media and entertainment sector, including content production, intellectual property licensing, distribution and other expected revenue sources; re-establish a meaningful operating presence in the Chinese digital entertainment market and participate in its long-term growth; and leverage the group's Hong Kong listing platform and the target company's capabilities to gradually expand from Hong Kong to international markets. In light of the foregoing, the board believes that the acquisition (including the allotment and issue of consideration shares and warrants under the general mandate, and the establishment of a joint venture at completion) will help reposition the group's strategic vision and put it into immediate implementation.