A Chinese metal manufacturer has announced the acquisition of a majority stake in a Hollywood film production company, the latest move of Chinese industrial firms seeking to diversity from loss-making businesses amid the economic slowdown.

Xinke New Materials Co Ltd, a copper processor based in Anhui province, said it will acquire 80 percent of stake in Midnight Investments LP, the owner of Hollywood production studio Voltage Pictures for 2.39 billion yuan ($350 million), according to its filing to the Shanghai Stock Exchange published on Sunday.

The US filmmaker produced movies including the award-winning Hurt Locker and Dallas Buyers’ Club.

Xinke’s move followed Chinese property developer Dalian Wanda Group’s $1 billion purchase last week of Hollywood television company Dick Clark Productions which produces the Golden Globe and Billboard Music awards.

Industry analysts said the deal highlighted the trend in China where industrial companies are stepping up efforts to diversity their business from loss-making sectors through investment in more promising business such as the entertainment industry.

“There is certainly a trend here as companies in loss-making industries are looking for opportunities in sectors with high growth potential. Entertainment is one of them,” said Xiao Han, a partner at Chinese entertainment research company EntGroup Inc.

Xinke said in its filing that the deal, which will be a cash transaction, will help boost its profitability and strengthen its position in the domestic and international film business.

The company reported a loss of 79.8 million yuan in the third quarter while the US firm Midnight Investments reported total net profit of $118 million in the first half of this year.

An anonymous banker who advised Xinke on the deal was quoted by the Financial Times as saying that the company was “aiming at strategic transformation through the acquisition”.

Xinke already entered the Chinese entertainment business by purchasing domestic TV production firm Kingswood Culture for 1.2 billion yuan in 2014.

Some industry analysts fear that the deal by Xinke could face regulatory hurdles as the Chinese securities regulator has tightened supervision of listed companies acquiring assets in industries not related to their core activities.

But Xiao from EntGroup Inc said that the regulator’s intention is to curb illegal operation and speculation in the M&A market, which is not the case for Xinke as Voltage Pictures is a good quality asset that would help boost the company’s profitability and market value.

-The 18th China(Guangzhou)Int’l Metal &Metallurgy Exhibition