(Yicai Global) Feb. 6 -- Wang Jianlin's Wanda Group Co. has decided to sell almost 12.8 percent of subsidiary Wanda Film Holding Co. to internet giant Alibaba Group Holding Ltd. and state-owned entertainment and film company Cultural Investment Holdings Co. in what observers have called a "smart move."

The buyers will pay CNY51.96 (USD8.26) a share, valuing the deal at CNY7.8 billion (USD1.24 billion), Beijing-based Wanda Film said in a statement yesterday. Alibaba will invest CNY4.68 billion and Cultural Investment CNY3.12 billion, becoming the company's second- and the third-largest shareholders. Wanda Group will retain control with a stake of just over 48 percent.

Commentators said the sale is an inspired arrangement as both new investors have backgrounds in the movie sector and Cultural Investment's controlling shareholder, wholly state-owned Beijing Cultural Investment and Development Group Co., was set up by the State-Owned Cultural Assets Supervision and Administration Office of the Beijing municipal government.

Billionaire founder Wang's debt-laden conglomerate has been diversifying from real estate development into the fast-growing entertainment sector. Dalian-based Wanda Group has made early headway in its transformation. Services accounted for 63.4 percent of total revenue last year, an increase of 8.4 percent. But the group's financial data shows that it failed to achieve last year's goals for its television, film and network businesses, though profitability in financial services exceeded expectations.

After the stake purchase, Cultural Investment will cooperate with Wanda Film to operate its cinemas and advertising business, with the aim of integrating resources to support Beijing's leading cultural enterprises and promote overall development of the capital city's creative industries, Beijing News reported, citing insiders. Alibaba joined the deal at Wang's suggestion, it added.

Last month, Wanda Group said it would step up efforts to clear overseas debt this year after net profit growth remained flat in 2017. The group came under scrutiny from China's regulators last year for reportedly transferring a large number of assets abroad, though most remain in China, according to Wang.