- Legendary purchase is China's largest move into Hollywood yet
- Founder Thomas Tull to stay on as chairman, CEO of Legendary
Billionaire Wang Jianlin is poised to become the first Chinese person to control a Hollywood film company after Asia’s richest man agreed to buy the co-producer of "Jurassic World" for as much as $3.5 billion in cash.
Wang-controlled Dalian Wanda Group Co.’s purchase of Burbank, California-based Legendary Entertainment marks China’s largest overseas "cultural acquisition," according to a joint statement. It also paves the way for the creation of the world’s biggest film company by revenue, Wang said in the statement.
The producer of the "Dark Knight" Batman trilogy and "Godzilla" paves the way for China to broaden its influence over U.S. mainstream films beyond cameos of Chinese actors. For Wang, the deal is the latest example underscoring his ambitions to expand a burgeoning entertainment empire that owns the second-largest U.S. movie-theater chain and is building the world’s biggest studio-plus-theme park.
“This is an asset he’s able to buy and has the cash to do it," said Peter Schloss, founder of CastleHill Partners in Beijing. "It has some high-profile action films, not a lot of baggage like other studios in terms of politically sensitive movies.”
Wang’s backing gives Legendary, led by founder Thomas Tull, access to funds needed to churn out movies such as sequels to the "Pacific Rim" and "Godzilla" franchises. In 2014, Legendary raised $250 million in equity from Japan’s SoftBank Group Corp. and last year, the company was said to be in talks to borrow as much as $700 million.
Tull, who will remain chairman and chief executive officer of Legendary, has been seeking to expand in Asia with Legendary East and in 2013 signed an agreement with China Film Co. to jointly produce large-scale films for global audiences, such as “The Great Wall,” which will star Matt Damon.
Wanda started building cinemas about a decade ago in a foray into a culture industry that Wang said has “no ceiling” on brand influence and profitability. Last year, the Chinese group backed its first U.S. production, Weinstein Co.’s “Southpaw.”
Legendary will join Wang’s growing global entertainment portfolio that already includes AMC Entertainment Holdings Inc., Infront Sports & Media AG and a stake in Spain’s Club Atletico de Madrid soccer team. In 2014, Wanda bought land in Beverly Hills, calling the $1.2 billion complex it plans to erect there its “first important step into Hollywood.”
Wang said in Tuesday’s briefing that he’s looking to buy cinema assets in Europe but is waiting for the right time because prices are too high. Wanda is buying the "vast majority" of Legendary, with Tull keeping a stake. Wang, whose fortune is estimated at $31 billion by the Bloomberg Billionaires Index, said he’ll begin the process of pursuing an initial public offering of his film-production operations soon.
He also hinted at bigger deals to come.
“Maybe in the not too distant future, we’ll hold an even bigger ceremony," Wang said. "Maybe we’d be buying some big entertainment company, or entertainment group. Such things can certainly happen.”
In China, seen by analysts as overtaking the U.S. as the world’s largest box office in the coming years, Wang’s entertainment business spans from cinemas to film production and theme parks. The business saw sales rise 46 percent to 51.3 billion yuan ($7.8 billion) in 2015, outpacing the group’s total revenue growth of 19 percent.
While the growth of the entertainment business may have stood out recently, Wang’s Wanda Group is a vast diversified empire with 634 billion yuan in assets and 290.2 billion yuan in revenue, with the biggest business being real estate.
Hollywood has already attracted investment from China in its films and production companies but hadn’t ceded control of any major producer. Alibaba Group Holding Ltd. invested in its first U.S. blockbuster with “Mission Impossible: Rogue Nation,” while film production companies STX Entertainment and Studio 8 attracted funding from Hony Capital and Fosun Group.
— With assistance by Dingmin Zhang