Wanda Group’s ambition: more international mergers and acquisitions

By | April 24, 2013

amc wanda meger

In May 2012, after two years of negotiations, Dalian Wanda Group and the world’s second largest cinema AMC signed a merger agreement. The total acquisition transaction amount reached $ 2.6 billion, including the purchase of 100% of the equity and the assumption of debt in two parts. Meanwhile, Wanda invested no more than 500 million U.S. dollars, thus Wanda total pay $ 3.1 billion for the deal. AMC is the second largest theaters in North America, with more than 92 years of history which owns 347 cinemas and a total of more than 5,000 screens, is a household name in the United States. This merger means that 10 percent of the world’s theater market is integrated and represents the largest investment by Chinese companies in the American culture industries by far.

Company Background

Dalian Wanda Group Corporation Limited is a Chinese conglomerate company founded in 1988 and operates in five major industries, including commercial properties, luxury hotels, tourism investment, cultural Industry, and department store chain. The company has assets of 250 billion yuan ($40 billion) and an annual income of 140 billion yuan ($22.2 billion), and pays 20 billion yuan ($3.2 billion) in taxes. The company now operates 55 Wanda Plazas, 34 five-star hotels, 814 cinema screens, 46 department stores and 51 karaoke outlets across the country. By 2015, the company aims to increase its assets to 300 billion yuan ($44.8 billion) and income to 200 billion yuan ($31.7 billion), and pay 30 billion yuan ($4.8 billion) in taxes, becoming a world-class enterprise.

More M&A actions are coming: To increase the bargaining power with Hollywood

ironman 3

Iron Man 3, was set for release on May 3, 2013 suddenly confronted with a crisis because of a profit-sharing disagreement with Disney. Key theaters such as AMC had refused the pre-sale of “Iron Man 3”, the two sides will need to proceed further negotiations. Thus it can be seen that theaters are usually in negotiations with upstream companies, terminal resources and customer base will affect the right to speak and finally influence the profit earning.

Wanda Group already has the world’s largest cinema business, but its chairman Wang Jianlin wants it to be bigger.In addition to AMC, Wanda is also seeking mergers and acquisitions of other major theaters of Europe and the United States as well as in other countries, the goal is to occupy a market share of about 20% of the global film market by 2020. According to Wang Jianlin’s planning, in the next 10 years, Wanda will continue to invest $ 10 billion in the U.S. market and a total $ 30 billion worldwide.The money will be invested among the film based cultural industries.

Control the Chinese cultural exports platform

China’s cultural industry “going out” strategy is the common expectations of the current government and enterprises, but the East-West cultural differences lead to somewhat slow pace of the strategic movement. Wanda’s layout of the market through the acquisition of theaters in Europe and the United States can indeed successfully seized the cultural industry output channels and platforms through which exhibiting the Chinese culture will obtain more firmed and substantial progress.

Reference/Source:

http://finance.qq.com/a/20130424/001943.htm

http://www.wanda.cn/English/About/Jianjie/index.shtml

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