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China's Wanda wraps £2.4bn deal to buy Batman film company

Published 12/01/2016

Wanda chairman Wang Jianlin is buying Hollywood film company Legendary Entertainment (AP)
Wanda chairman Wang Jianlin is buying Hollywood film company Legendary Entertainment (AP)

Wanda Group is buying Hollywood's Legendary Entertainment, the maker of films such as Batman, for 3.5 billion dollars (£2.4bn) in the first Chinese acquisition of a major US film company.

Wanda, whose chairman, Wang Jianlin, ranked last year as China's richest entrepreneur, has expanded rapidly into the film industry. It bought US cinema chain AMC in 2012 and is developing an eight billion-dollar (£5.5bn) studio complex in eastern China.

New but cash-rich Chinese companies are on a buying spree abroad in industries from finance to yacht building for assets that can speed their development at home and help them expand in world markets.

With its latest acquisition, Wanda's film businesses will include a full range of production, distribution and exhibition, Mr Wang said. The company, based in the north-eastern port city of Dalian, also has interests in hotels, retailing and property.

Legendary's productions include the Batman trilogy, Inception and The Hangover. The company says its movies have grossed more than 12 billion dollars (£8.3bn) worldwide.

"Wanda will help Legendary increase its market opportunities, especially in the fast-growing China market," said Mr Wang.

Wanda's latest purchase is the fourth-largest Chinese investment in the United States, according to Dealogic, a financial information provider. It ranks behind WH Group's seven billion-dollar (£4.8bn) acquisition of pork packer Smithfield Foods in 2013, the Chinese sovereign wealth fund's 2007 purchase of a 9.9% stake in Morgan Stanley for 5.6 billion dollars (£3.9bn) and Unisplendour's offer of 3.7 billion (£2.5bn) this year for 15% of Western Digital Corporation.

Film, music and television companies see China and its increasingly prosperous population of 1.3 billion potential viewers as one of their most promising markets. Even as economic growth slows, China's consumer spending is expanding faster than that of the United States and other Western markets.

Ticket sales in China, already one of the world's biggest movie markets, rose nearly 50% last year to 44 billion yuan (£4.7bn), according to Nomura. It said in a January 7 report that total revenue was forecast to rise another 25% this year.

Mr Wang, 62, has a net worth of 34 billion dollars (£23.4bn), according to the Hurun Report, which follows China's wealthy.

Chinese companies invested 11 billion dollars (£7.6bn) in the United States over the past year, according to data gathered by Derek Scissors, a researcher at the American Enterprise Institute in Washington. The total since 2005 stands at 93.3 billion dollars (£64.3bn).

Many acquisitions abroad are aimed at obtaining technology or brands to expand the buyer's market share in China or to capture profit from foreign goods and services flowing into China.

On Monday, China's biggest chemical company, state-owned ChemChina, announced it has bought KraussMaffei, a German maker of machinery to process rubber and plastic, for 925 million euros (£693m), the biggest Chinese investment to date in Germany.

In August, Wanda paid 650 million dollars (£448m) for World Triathlon Corporation, the Florida company that operates the Ironman triathlon race, and said it planned to promote the growth of competitions in China.

Last February, Wanda paid one billion euros (£749m) for Swiss sports management company Infront Sports & Media.

In contrast to Western companies that cut staff after purchases, Chinese buyers keep employees and sometimes hire more because they want foreign skills and experience.

Wanda said Legendary's Thomas Tull would remain chairman and chief executive, with responsibility for day-to-day operations.

"Wanda and Legendary will create a completely new international entertainment company," Mr Tull said.

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