Date: 05-20-12 22:16
The following is a May 20, 2012 article titled "China’s Wanda to Buy AMC Cinema for $2.6B" found at Bloomberg's BusinessWeek magazine's web site:
By Zachary R. Mider
Dalian Wanda Group agreed to buy AMC Entertainment Holdings Inc. (AMC) (AMC) for $2.6 billion including debt, expanding into the U.S. with a deal that creates the world’s largest cinema chain.
Wanda Group said in a statement today that it plans to invest an added $500 million in Kansas City, Missouri-based AMC, owned by buyout firms including Apollo Global Management LLC. (APO) (APO)Wanda Group, based in Beijing, is controlled by billionaire real-estate developer Wang Jianlin.
The deal unites the No. 2 theater chain in the largest market, the U.S., with the biggest player in China, among the fastest-growing. Wanda’s move underscores the growing ties between the U.S. and Chinese film industries, which benefited from a slew of cross-Pacific deals this year.
“We have much to learn from them,” Wang said through a translator in a phone interview today. “However, we would like to say we can learn from each other,” he said, adding that in some respects the Chinese cinema market is more advanced.
Wanda plans to spend the $500 million on reducing debt and improvements to the AMC theaters, said Gerardo Lopez, AMC’s CEO. Those include upgrading more theaters to show Imax and 3D movies, and adding more dining options and bars.
Wanda Group is one of China’s largest real-estate companies, with interests in luxury hotels and department stores. It is already China’s largest cinema operator, with 86 locations.
China’s Box Office
Adding AMC’s 346 locations, mostly in the U.S., would make Wanda the largest operator by revenue, surpassing Knoxville, Tennessee-based Regal Entertainment Group. (RGC) (RGC) Regal had $2.7 billion of sales in the year ended Dec. 29, 2011, according to regulatory filings. AMC had about $2.5 billion in the year ended March 31, 2011, according to regulatory filings.
Chinese box-office sales increased 35 percent to $2 billion last year, according to the Motion Picture Association of America, making the nation the third-biggest market after the U.S. and Japan. In the first quarter, China surpassed Japan on a trailing 12-month basis and is now the second largest market, Lopez said, citing MPAA data.
Wanda and AMC share the goal of expanding globally, according to the release. The additional funding will support AMC’s strategic and operating initiatives, Wanda said, without elaborating.
Apollo and JPMorgan Chase & Co.’s buyout unit agreed to buy AMC in 2004 for about $2 billion including debt. The next year, they agreed to merge the business with Loews Cineplex Entertainment Corp., owned by Bain Capital LLC, Carlyle Group LP, and Spectrum Equity Investors, leaving the combined company owned jointly by the five firms.
The cinema chain withdrew plans for an initial public offering in 2008, and filed a second time, in July 2010, seeking to raise as much as $450 million. AMC has been in intermittent discussions with Wanda Group since shortly after the 2010 IPO filing, Lopez said. AMC also held discussions with other buyers, including private-equity firms.
Film-industry ties between the U.S. and China have strengthened this year, after China agreed to provide greater access to U.S. studios, and Walt Disney Co. (DIS) (DIS), DreamWorks Animation SKG Inc. (DWA) (DWA), and News Corp. (NWSA) (NWSA) formed co-production partnerships that will include some of their biggest movies.
Disney, the world’s largest entertainment company, in April agreed to develop animation content with Tencent Holdings Ltd. (700), China’s biggest Internet company, and a unit of the Ministry of Culture. The Burbank, California-based company will co-produce“Iron Man 3” from its Marvel unit with Beijing-based DMG Entertainment.
DreamWorks Animation, based in Glendale, California, and run by CEO Jeffrey Katzenberg, said in February it will form Oriental DreamWorks, a Shanghai-based joint venture to develop entertainment projects in China that will include theme parks and live productions. Rupert Murdoch’s News Corp., owner of 20th Century Fox, this month bought a stake in Beijing-based Bona Film Group Ltd. (BONA) (BONA), a movie producer and distributor.
Ernst & Young LLP is providing financial advice to Wanda Group on the transaction, and AMC is using Citigroup Inc. (C) (C) Davis Polk & Wardwell LLP and Weil Gotshal & Manges LLP served as legal advisers for Wanda and AMC, respectively.
The article may be found at the following link:
This is soft power. ;-0
I know some will say it's not, but when the world's largest cinema chain is in Chinese hands and Hollywood studios are stumbling over themselves to get into the lucrative Chinese theater market and joint venturing to co-produce movies...well you get the idea. ;-0
They're not exactly going to produce movies to insult their intended audience. ;-0