Wanda acquires US film studio in US$3.5b deal
Print Edition
CHINESE conglomerate Dalian Wanda Group has bought a majority stake in US film studio Legendary Entertainment for about US$3.5 billion, turning Wanda Chairman Wang Jianlin into a Hollywood movie mogul as the tycoon steps up a drive to diversify his business empire overseas.
The deal, announced yesterday in Beijing, is “the largest cross-border cultural acquisition made by a Chinese company to date,” according to a statement by Wanda.
“Wanda is planning an initial public offering for its movie production and distribution assets and the acquisition of Legendary Entertainment will, without any doubt, be a big highlight in the wealth story of Wanda,” Wang said. “Wanda is buying Legendary not only for the studio’s movies, but for intellectual property reasons as well.”
He added: “Wanda Cinema already has made tremendous development in China, but it isn’t enough. Movies are global, and our company certainly wants to add our voice to the world film market.”
The maker of blockbusters such as “Jurassic World,” “Godzilla” and “Inception,” Legendary Entertainment’s film productions have grossed more than US$12 billion worldwide at the box office, according to Wanda’s statement.
The deal will enable Wanda to become the world’s largest player in the movie industry in terms of revenue with huge influence in both the US and China, the two most important movie markets, Wang said. The acquisition will also allow Wanda to learn from the experience of its US counterpart in areas such as making movies, production and distribution.
The deal will also provide Legendary Entertainment with more growth opportunities, particularly in China, where the movie market has been expanding at a rapid rate, Wanda said.
The company is already the world’s biggest movie theater operator after buying AMC Entertainment Holdings Inc, North America’s second-largest cinema chain, for US$2.6 billion in 2012. In June 2015, it acquired Australian movie theater company Hoyt’s Group.
Wanda Cinema Line Corp, the group’s domestically listed firm, is the biggest theater operator in China with 8 billion yuan (US$1.2 billion) in revenue last year, an increase of nearly 50 percent from 2014.
As part of the deal, which was signed yesterday after more than two years of negotiations, Legendary Entertainment’s founder and CEO Thomas Tull will continue to head up the movie maker.
Tull told reporters yesterday that Wang had been “insistent we run operations and continue to run things the way we always have.”
Legendary generally provides half the financing for movies whose budgets can run up to US$200 million or more. It also has an agreement with China Film Co, the largest and most influential film company in China, to co-produce movies.
Both Wang and Tull dismissed concerns that Wanda’s investment would lead to censorship or alter the content of its motion pictures.
“I’m a businessman,” said Wang. “I buy things to make money, so I don’t really think about government priorities. My main consideration is commercial interest.”
Tull said that Legendary had already built up a brand in China with its blockbusters and wasn’t looking to change its content.
Drive to diversify
“Frankly, we make movies that we want to see and thankfully they work here in China.”
The deal is Wanda’s biggest overseas acquisition to date and comes as Wang accelerates a drive to diversify a giant with 2015 revenue of US$44 billion away from its core, but slowing, domestic property operations.
Last August, Wanda said it had agreed to buy World Triathlon Corp, organizer of Ironman triathlons, for US$650 million. That deal, considered a milestone in China’s sports industry development, helped make Wanda the owner of the world’s largest sports operating company.
Six months prior to the Ironman deal, Wanda acquired Infront Sports & Media AG for 1.05 billion euros (US$1.2 billion). The Swiss sports marketing group holds some broadcasting rights to the World Cup. In January 2015, the company acquired a 20 percent stake in Spanish soccer team Atletico Madrid.
In October, Wang, the firm’s founder, was ranked the “Richest Property Tycoon” in China’s mainland for the fifth time by the Hurun Report with a real estate fortune of 120 billion yuan.
The 61-year-old also snatched back the title of the richest man on the mainland from Alibaba’s Jack Ma in the earlier released Hurun Rich List 2015.
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