Beijing: China Literature Ltd, the e-books business spun off by Tencent Holdings Ltd, agreed to buy New Classics Media for as much as 15.5 billion yuan ($2.3 billion) to expand in filmed content.

The deal will be settled with cash and new shares issues to New Classics senior management team and Tencent, Shanghai-based China Literature said in a statement on Monday. The final price will be subject to an earn out mechanism which only has a possible downward adjustment if earnings fall below certain levels, it said.

The deal adds popular TV programmes and films to China Literature’s content offerings, including the series The First Half of My Life and films such as Some Like it Hot. It’s the first deal by China Literature since its blockbuster initial public offering in November that raised more than $1 billion and saw the stock jump 86 per cent on debut.

“This transaction combines China Literature’s unparalleled content library and NCM’s industry leading expertise in script development and production,” it said in the statement.

China Literature said it would fund the transaction with 5.1 billion yuan of cash and 10.4 billion yuan in stock. Bank of America Merrill Lynch was the exclusive financial adviser on the deal.

China Literature owns nine major branded products and its flagship is QQ Reading, a mobile aggregation and distribution platform, it said. Tencent distributes China Literature across a number of its products, including Tencent News and Weixin Reading.

The company’s content is also distributed beyond its controlling shareholder Tencent by pre-installing apps on smartphone partners including Oppo, Vivo and Huawei.