Move in line with overall plan of global diversification
Dalian Wanda Group Co announced on Tuesday that it has acquired U.S.-based movie studio Legendary Entertainment for no more than $3.5 billion in cash, the latest move by the Chinese giant to diversify its business overseas.
Chairman Wang Jian-lin said at a press conference that it is expected Legendary will be packaged with Wanda's own movie production and distribution assets in China for an IPO this year, but he didn't disclose further details.
Wang said the purchase of Legendary reflected the fact that the U.S. company has a large base of intellectual property.
The merged entity will not only focus on movie cooperation, and the transaction is also in line with recent moves, as Wanda is exploring the tourism and entertainment industries, he said.
"The purchase will increase the voice of Wanda in the global cinema market," Wang remarked.
The deal, which Wanda said was China's largest cross-border cultural acquisition, could mean more opportunities for Legendary to improve its performance, Wang said. He noted that the Chinese movie industry will still have seven to eight years of a premium period.
Under the deal, Wanda will be the controlling party. Thomas Tull will remain chairman and CEO of Legendary and retain responsibility for daily operations. Tull said he believed that the Chinese market was the future of the world.
Legendary, which is behind movies such as Batman and Jurassic World, is one of the leading film production companies in the U.S., with film, TV, digital and comics divisions. The company said its films have generated more than $12 billion worldwide at the box office.
In 2011, Legendary Pictures reportedly formed a joint venture production company named Legendary East with China's Huayi Brothers Media Corp. At the time, reports said the venture would make one or two films for global audiences from 2013, but no further details were ever released.
Wanda's latest move is not only intended to increase its influence on the movie industry, but also to enhance its development in the tourism sector, which is in line with Wanda's transformation strategies for the coming years, Huang Guofeng, an analyst at Analysys International, told the Global Times on Tuesday.
On January 4, Wanda said it had completed the purchase of AMC Entertainment Holdings Inc for $2.6 billion, making Wanda the largest cinema operator in the world.
In 2015, Wanda paid $1.2 billion for Swiss sports management company Infront Sports & Media, and it also owns Australian movie theater company Hoyt's Group.
However, Huang warned that "how to realize localization is still a challenge ahead for Wanda."
Wang Jianlin of Wanda said the Legendary deal does not mean the Chinese movie industry can challenge Hollywood, as the Chinese film industry is still about three decades behind the rest of the world and "we are still learning."
Wanda Group had a 19.1 percent increase in revenue for 2015, according to a flash earnings report released on Sunday. The group's cultural business division with its cinema operations saw revenue of 51.28 billion yuan ($7.79 billion), up 45.7 percent from 2014.
Wanda Cinema Line, which got listed at the end of 2014, saw revenue of 8 billion yuan, up 49.9 percent year-on-year, the company said.
