China's Wanda Deal for Legendary Gets U.S. Regulatory Approval
Last month, the Chinese conglomorate announced plans to acquire the U.S. co-producer of 'Godzilla' and 'Jurassic World' for $3.5 billion, which would be the largest Chinese buyout of a U.S. media company ever.
The U.S. Department of Commerce has given Chinese real estate and investment conglomerate Dalian Wanda Group the green light to go forward with its $3.5 billion acquisition of Thomas Tull's Legendary Entertainment.
The Chinese buyout of the U.S. film studio was announced by the two partners in January.
“It is quite a feat for an acquisition to be approved by the U.S. Department of Commerce in such a short time,” Wanda said in a statement on Tuesday. “This reflects the positive attitude that the U.S. government has towards Sino-U.S. cultural exchange."
The Legendary deal is Wanda's latest step toward its goal of becoming a global, vertically integrated film company. The Chinese conglomerate has been pushing to diversify from its core real estate business since August 2012, when it spent $2.6 billion to acquire AMC Entertainment, North America's second-largest cinema chain. Last year, Wanda paid more than $600 million for Hoyts, Australia’s second-largest multiplex group. Wanda also owns China's largest domestic exhibition circuit, Wanda Cinema Line, which has a market cap of $18.5 billion.
According to Wanda, once the Legendary deal goes through, it will be the highest-revenue-generating film company in the world (the Chinese giant is also rumored to be shopping for a pan-European movie theater network).
The Wanda-Legendary deal faces one final regulatory hurdle: approval by China's National Development and Reform Commission and the country's Ministry of Commerce. The agreement isn't expected to encounter any difficulty in receiving swift passage on the Chinese side, however, given the way the Chinese government has been supporting leading local businesses' efforts to go global.
Wanda's founder and chairman, Wang Jianlin, is one of China's wealthiest individuals, with a net worth estimated at $32.7 billion by Forbes.
The big budget, spectacle-heavy pictures Legendary specializes in have had a strong track record in China. Many of the titles the studio has co-produced — such as Godzilla, Inception, Jurassic World and Pacific Rim — have done particularly big business in the CGI-loving Chinese market, which is expected to surpass North America as the world's most valuable theatrical territory sometime next year.