China's Asian Union Film and Media has sold a 50%stake to Hong Kong's Universal Holdings, in a move that leads toward aback-door listing in Hong Kong.

The Beijing-based company sold half its equity for $70m(HK$550m) to Universal (not to be confused with Universe InternationalHoldings), a digital broadcasting equipment distributor which is listed on themain board of the Hong Kong Stock Exchange.

Asian Union Film is one of China's largest filmproduction and distribution groups and is also involved in TV production,channel management and advertising. It is jointly owned by founder Dong Pingand state-owned Poly Culture & Arts Co.

The company recently produced San Sebastian winner LetterFrom An Unknown Woman and is co-financingJohn Woo's $36m The Battle Of Red Cliff.

The group, which reported turnover of $22m (RMB180m) in2004, also owns leading distributor PolyBona Films and production outfitEastern Dragon.

Universal will settle the purchase by issuing 3.05 billionnew shares at $0.006 each and issuing $37m worth of convertible notes to itschairman Johnson Ko. It will also issue 2.7 billion new shares at $0.005 eachto Asian Union's Dong. Universal's share price doubled in responseto the news.