Wanda to Merge Chinese Film Assets Under Listed Unit

Wanda Group is planning to consolidate its Chinese film assets, in the latest move by billionaire tycoon Wang Jianlin to reshuffle his property-and-entertainment empire.

Shenzhen-listed Wanda Film Holding, the group’s movie theatre developer, announced in a notice to the stock exchange that it would buy a 96.83 percent stake in the group’s film production and distribution unit Wanda Media for more than RMB 11.61 billion ($1.78 billion) via cash and share issues.

The transaction will reduce Wang’s ownership of Wanda Film from 48.09 percent to 41.75 percent, while expanding the listed company’s business into film and television investment, production and distribution.

Wanda Film has been suspended from trading on the Shenzhen exchange since July of last year, pending the restructuring plan that was only just announced on Monday. The move would effectively take Wanda’s film business public, at a time when the cash-strapped conglomerate still awaits mainland approval for a proposed IPO of its mall development arm.

Wanda to Bring Cinemas, Production Under One Roof

Wanda Film Holding, formerly known as Wanda Cinema Line, says that it is the world’s largest movie group with operating revenues of RMB 13.2 billion ($2 billion) in 2017. The company owns 447 cinemas in China according to its website, which commands some 3,947 screens. The cinema operator is said to control some 14 percent of the Chinese market.

Beijing-based Wanda Film focusses on building and operating cinemas and related activities such as film distribution and screening. The merger with privately held Wanda Media aims to bring the group’s content production and theatre operations under one roof, transforming the listed cinema builder into an all-purpose provider of media marketing, film and TV dramas, and online games.

The proposed transaction does not include Hollywood studio Legendary Entertainment, which Wanda bought for $3.5 billion in 2016, or US-based AMC Entertainment which it snapped up in 2012. Wanda tried to incorporate Legendary into its mainland cinema unit in late 2016, but postponed the deal, citing the need for the production house to become profitable first.

Game of Mergers and Sales Rolls on

The planned consolidation of Wanda’s film assets marks another step in Wang Jianlin’s drive to reorganise his sprawling business empire, which drew regulatory scrutiny last year over a debt-fuelled acquisition binge that included overseas trophy properties and entertainment firms.

This past February, Chinese e-commerce giant Alibaba Group and Beijing-based Cultural Investment Holdings teamed up to buy a nearly 13 percent stake in Wanda Film from Wanda Group for RMB 7.8 billion ($1.24 billion). That deal followed a RMB 34 billion ($5.37 billion) investment in Wanda Commercial Properties (now called Wanda Commercial Management Group) by a consortium led by WeChat maker Tencent and Alibaba rival JD.com in January.

Wanda Commercial Properties, the group’s flagship commercial real estate unit, applied for a listing on the Shanghai stock exchange last year, less than a year after its delisting from the Hong Kong Exchange in September 2016. The company was reported in March to be the 60th firm in line awaiting IPO approval.

In the same month, Wanda Commercial Properties changed its name to Wanda Commercial Management Group to reflect its metamorphosis into a development service provider and multi-channel retail operator.

Wanda has attempted to sell over $9 billion worth of assets since 2017, including landmark real estate projects in Australia and London, as it seeks to ease financial strains. The group’s chairman and founder Wang has also shifted around his hotel business as part of the overall restructuring campaign.