``Godzilla'' and ``Jurassic World,'' hit movies about oversized monsters snapping up smaller fry, were money-spinners for Legendary Entertainment in the past couple of years. Now it's time for the Hollywood studio itself to be swallowed by a larger predator: China's richest man.
Wang Jianlin's Dalian Wanda Group is close to a deal to buy a majority stake in closely held Legendary. The transaction would value the company at $3 billion to $4 billion, Reuters reported. Burbank, California-based Legendary finances and produces films, typically in partnership with larger studios such as Universal Pictures and Warner Bros.
A deal would be a milestone, marking the first time a Chinese company had taken majority control of a major Hollywood studio. Wang previously held talks to buy a stake in Lions Gate Entertainment and also Metro-Goldwyn-Mayer, but no agreement was reached. Lions Gate was willing to sell only a minority holding, Bloomberg News reported in 2014.
Hollywood's appeal for the Chinese billionaire isn't difficult to fathom. China's box office is exploding. Ticket sales jumped an average of 30 percent annually between 2010 and 2014, and are projected to reach $11.7 billion next year, matching those of the U.S., according to EntGroup, a Beijing-based research firm. China's box-office takings were $6.2 billion last year, with about half coming from Hollywood movies -- even though the government restricts the number that can be screened to only 34 a year.
Dalian Wanda, which already owns the AMC cinema chain in the U.S., is building the world's biggest studio-plus-theme park in the eastern Chinese city of Qingdao, and in 2014 bought land in Beverly Hills for a $1.2 billion complex. Acquiring Legendary would add technical expertise and proven hit-generating capability.
Having been rebuffed by Hollywood's bigger reptiles, Wang appears to have settled for the biggest he could land. The acquisition is unlikely to come cheap. Based on the figures reported by Reuters, Wang will have to shell out more than $1.5 billion. Hong Kong's Golden Harvest bought 3.33 percent of Legendary in 2010 for $25 million, implying a valuation for the entire company of less than $1 billion. More recently, SoftBank invested $250 million in the studio in October 2014, in a deal that people familiar with the matter said suggested a valuation of more than $3 billion.
China's potential to be the world's biggest movie market may justify the outlay. Government permitting, of course. The Communist Party under President Xi Jinping is wary of Western cultural influences. Besides restricting the import of foreign films, authorities have also forced video sites to remove American TV programs.
Then again, no one gets to become the richest man in China without knowing something of the mind of the government and how its thinking may evolve. Perhaps Wang can see a favorable plot twist in this tale.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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