China's Xiaomi to buy stake in software firm Kingsoft from Tencent

[BEIJING] China's Xiaomi Inc has agreed to buy about 3 per cent of software firm Kingsoft Corp Ltd from Tencent Holdings Ltd for HK$527 million (US$67.99 million), according to a Kingsoft filing on Monday.

The deal with Xiaomi, the world's third-biggest smartphone maker, is expected to close on Jan. 30, the filing to the Hong Kong exchange said. Chinese social networking and video game giant Tencent will still hold 9.6 per cent of Kingsoft.

Xiaomi CEO and Chairman Lei Jun is also a founder and now chairman of Kingsoft, which makes entertainment, Internet security and office software. The deal is set to increase Lei's voting rights in Kingsoft to 29.9 per cent.

With Samsung Electronics Co Ltd and Apple Inc in its sights in the handset market, Xiaomi is now expanding into home appliances and television. The Beijing-based company has already reserved US$1 billion for Internet TV content.

In an interview last week, Xiaomi's Hugo Barra, vice president of its global division, said the Beijing-based company would increasingly invest in media and content, including trying to acquire more from overseas.

Partnering with privately-held Xiaomi, now the world's most valuable tech start-up with a US$45 billion valuation, will benefit Kingsoft and help promote its business, Kingsoft said in its filing.

Xiaomi and Tencent were not available for immediate comment.

REUTERS