The American theatre chain gets a much needed infusion of cash, while the Chinese conglomerate gets experience in film distribution and chain management.
Dalian Wanda Group’s agreement to purchase AMC Entertainment for $2.6 billion creates the largest theater chain in the world and marks China’s biggest acquisition of a U.S. company, therefore it has some industry watchers wondering what the ramifications might be for the movie exhibition industry.
One high-ranking executive said his initial reaction to the May 21 announcement was 100 percent positive, given that AMC’s private-equity owners – Bain Capital, Apollo Global Management, the Carlyle Group and others – had allowed the theater ...view middle of the document...
The Wanda-AMC transaction is the latest involving China’s embrace of Hollywood and vice-versa. With a population of 1.3 billion, the market is enormous, but Chinese officials only allow about 34 foreign films into the country each year, which has the major film studios jockeying for favorable treatment. Disney/Marvel, for example, said Iron Man 3 will be coproduced in China with DMG Entertainment while DreamWorks Animation has formed Oriental DreamWorks with three Chinese partners and News Corp. has invested in Beijing-based Bona Film Group.
How, or if, the Wanda-AMC transaction impacts these and other initiatives remains to be seen, but Jianlin has also disclosed that Wanda applied for a license to import movies into China, which only two other entities now hold, and he told reporters that he’d like to acquire a European exhibitor next.
Some say it’s wise not to read too much into Wanda’s acquisition of AMC. It’s simply expanding worldwide, not only in movie exhibition but in other areas, as well.
“Wanda’s parent company is – among other things – a large real estate developer, and the purchase of AMC gives them a window into the US market,” the film exhibition executive said. “Wanda has aspirations to be the largest exhibitor in the world, and this acquisition puts them closer to realizing this goal.”
“I don’t see a lot of crossover meaning for the industry as AMC has been available to be purchased for a while and there was no bidding war,” added Steve Birenberg of Northlake Capital Management.
“Wanda probably just sees a growth opportunity in film and a good cash-on-cash investment,” said Birenberg. “Add in Wanda getting some expertise in distribution, theater construction and theater management for a big opportunity to expand Chinese theaters and screens, and I think Wanda probably just sees it as a decent investment with a Chinese-growth kicker.”
China Buys Hollywood Influence with Takeover of Top U.S. Cinema Chain
A massive China-based conglomerate headed by a member of the nation’s ruling Communist Party announced last week the largest ever corporate takeover of an American firm by a Chinese company, sparking concerns among analysts about the tyrannical regime’s projection of “soft power.” For more than $2.5 billion, the Dalian Wanda Group agreed to purchase U.S.-based AMC Entertainment Holdings — one of the world’s top movie-theater chains — to create what will become the biggest cinema operator on earth after the merger.
Critics of the deal expressed alarm over the influence the deal is expected to give China’s totalitarian rulers within the U.S. and international film industry. As the second-largest movie-theater chain in America, Kansas City-based AMC owns or operates hundreds of cinemas in more than 30 U.S. states and at least five other nations. It is also the world’s largest operator of I-MAX and 3D screens.
As such, the firm wields a great deal of sway when it comes to what movies...