China’s Dalian Wanda Group continues to expand into the global cinema industry as the company’s AMC Entertainment Holdings subsidiary agreed last week to buy out rival Carmike Cinemas in a $1.1 billion all cash deal.
AMC’s acquisition of the US’s fourth-largest cinema chain will make Dalian Wanda the US’ largest movie theater operator, and continues a string of entertainment industry mega-deals by the conglomerate controlled by China’s richest man, Wang Jianlin.
Wang, who made his fortune developing shopping malls in mainland China, bought US movie production house Legendary Entertainment for $3.5 billion in January, and has been using billion dollar acquisitions and investments to expand his empire into theme parks and other areas from its traditional base in real estate development.
Creating a New Movie Theatre Leader
The deal for Carmike, which was announced on Thursday night in the US, would combine AMC – which is already the US’ second largest theatre chain – with Carmike, which is currently ranked fourth in the country. Should the transaction pass scrutiny with US antitrust authorities, the combined company would create a new leader in terms of US theatre outlets, surpassing Regal Entertainment Group of the US, according to an account in the Wall Street Journal.
AMC’s offer to Carmike shareholder of $30 per share is almost a 20 percent premium over the stock’s closing price on Thursday of $25.11 per share, according to the Journal account, and includes assumption of existing debt.
Wanda acquired AMC in 2012 for $2.6 billion – the company’s first major overseas investment and a move that helped Wang establish a name for his company, and himself, globally.
In addition to its US theatre holdings, Wanda has its own chain of theatres in China, where the movie theatre operator is listed on the Shenzhen stock exchange. In 2014 Wanda acquired Australia’s second largest theatre chain in a deal valued at $743 million.
$10 Billion in Deals in 2016
The $1.1 billion movie theatre acquisition commits Wanda to over $10 billion in investments this year, with the bulk of these deals related to entertainment, although often with a real estate element.
In addition to buying Legendary for $3.5 billion in January, Wanda announced late last month that it will co-invest with France’s Auchan Group in the 3.1 billion euro ($3.4 billion) Europa City leisure development being built outside of Paris.
Also in January, Wanda announced a $2.3 billion joint venture with a British firm to establish private hospitals in China, and the company is rapidly unveiling a chain of theme parks on the mainland which is says will rival the soon-to-be unveiled Shanghai Disney Resort.
Wang, whose fortune is now estimated by Forbes to have reached $30 billion, has stated his goal of turning Wanda into a $200 billion company, with diversification into entertainment and other industries forming a core part of this strategy, as profits from Wanda’s core business in real estate development are predicted to fall 12.4 percent this year.