Wanda acquires AMC for US$2.6 bln
- By Li Xiao and He Shan
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E-mail China.org.cn, May 21, 2012
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An AMC cinema in Manhattan, New York. [CFP] |
Dalian Wanda Group Corp Ltd, the largest theater owner in China and Asia, signed a US$2.6 billion agreement on Monday to merge with AMC Entertainment, the world's second-largest cinema chain, after two years of negotiations. Wanda acquired a 100 percent stake in AMC and assumed its debt.
The agreement also guarantees working capital of no more than US$0.5 billion paid by Wanda after the merger, which makes the total value of the deal reach US$3.1 billion.
As the world's second-largest cinema chain, AMC Entertainment currently owns 20,000 employees, 346 theaters and 5028 screens. It is also the world's largest operator of IMAX and 3-D screens. In 2011, AMC achieved an audience of 0.2 billion and total revenue of US$2.5 billion. Wanda's merger with AMC will create the largest movie theater owner in the world.
Wang Jianlin, chairman of Dalian Wanda Group, said at a speech at Tsinghua University in April that the acquisition would be "a merger that surprises the world."
Analysts believed the deal will help Wanda gain a foothold into the U.S. movie market when China is in the midst of fulfilling its goal of installing 25,000 movie screens over the next five years. They said the AMC acquisition just fits China's strategy of forming alliances with American companies to expand its homegrown entertainment industry.
China's box office sales grew by 30% last year to US$2.1 billion and this year overtook Japan to become the biggest foreign market for Hollywood films.
Wanda Cinema Line Corp., Wanda Group's cinema arm, currently operates 730 screens in 86 multiplexes across its stores in China and has announced plans to increase its screen count to about 2,000 by 2015. It generated 1.77 billion yuan ($281.4 million) in box office revenue in 2011, leading among domestic cinema chains, according to Zero2IPO Research Center, a Beijing-based consultancy.
Wanda started the acquisition talks in 2010 with AMC, whose actual owners are investment groups including the Apollo Investment Fund and J. P. Morgan Partners. The merger was confirmed by the National Development and Reform Commission (NDRC) this March. The deal will be settled after the merger is approved by both the Chinese and US governments.
Wanda Group, which is based in the northeastern city of Dalian, is a major real estate developer, with interests mainly focusing on department stores and hotels.
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