Alibaba and State-Backed Partner Take $1.2B Stake in Wanda Theatre Business

Dalian Wanda Group is selling a nearly 13 percent stake in its 500 domestic movie theatres to Alibaba Group and a state-backed firm for RMB 7.8 billion ($1.24 billion), as Wang Jianlin offloads another piece of his property-to-entertainment conglomerate.

Under the deal, Wanda Group will transfer a combined 12.77 percent stake in Shenzhen-listed Wanda Film Holding Co Ltd to Alibaba and Beijing-based Cultural Investment Holdings Ltd (CIH). E-commerce giant Alibaba will invest RMB 4.68 billion of the total, according to a statement by Wanda Group.

Wanda will retain control of the company, which builds and operates cinemas across China, with a 48.09 percent stake. The move comes after Wanda announced a $4.5 billion investment in its flagship commercial property arm from a group including WeChat maker Tencent Holdings and Alibaba rival JD.com late last month.

Wanda’s Theatre Business Gets a Burst of Cash

Wanda Film Holding, formerly known as Wanda Cinema Line, is China’s largest multiplex owner and operator with some 500 cinemas and 4,000 screens across the mainland, and also handles film production, distribution and marketing. The company does not include Legendary Entertainment, the Hollywood production house that Wanda Group picked up in 2016.

“The main purpose of the equity transfer of Wanda Film Holding is to bring in shareholders with strategic value,” Wanda said in a statement. The conglomerate added that the film unit would benefit from Alibaba’s “big data” resources, while the other investor, CIH, would help introduce tourism-related opportunities.

Wanda Film Holding had operating revenues of RMB 13.2 billion ($2 billion) last year, according to the statement.

Beijing Auto Parts Maker Co-Stars in Alibaba Theatre Deal

The deal with Wanda could raise Alibaba founder Jack Ma’s profile in the Chinese film industry, as the NYSE-listed firm competes with Tencent’s film and television ventures. The group’s film division, Alibaba Pictures Group, in 2016 bought a stake in Amblin Entertainment, the US studio backed by Steven Spielberg. Alibaba cited the “future development potential” of Wanda Film in a statement.

CIH, which is indirectly controlled by the Beijing municipal government, changed its name from Song Liao Automotive in 2016, as the maker of cars and auto parts moved to reinvent itself as a global entertainment player. Months after the rebrand, the company with investments ranging from food packaging to e-commerce agreed to buy a 75 percent in British visual-effects studio Framestore, in a deal that valued the latter at nearly $187 million.

Wang Jianlin Unwinds More of His Empire

Beijing-based Wanda has announced some $16 billion in investment deals since last year, as the debt-strapped conglomerate undergoes a major restructuring. The mall builder chaired by billionaire tycoon Wang said at the end of January that it was selling a 14 percent stake in Dalian Wanda Commercial Properties to an investor group led by Tencent and including JD.com, electronics retailer Suning and longtime Wanda partner Sunac China Holdings.

On the same day, Wanda confirmed the sale of its pair of flagship Australian properties for the equivalent of $913 million, including equity and the assumption of debt, as part of a sell-off of its overseas real estate portfolio.