Wanda Scraps $5.6B Plan to Merge Legendary With Other Movie Assets
The company said that Legendary must prove that it can earn a profit on its own before a planned merger of its movie businesses can go forward.
Dalian Wanda Group, the Chinese real estate and investment conglomerate headed by China's richest man, Wang Jianlin, has abandoned its plan to fold Legendary Entertainment into the group's publicly listed movie theater subsidiary.
In April, Wanda Group announced that it would merge Legendary and Chinese movie-production subsidiary Wanda Media with its publicly listed movie theater chain business, Wanda Cinema Line Co. But in a regulatory filing with the Shenzhen stock exchange Monday, Wanda Cinema said that market conditions had changed and the deal was premature. A deal at this time wouldn’t be in the best interest of minority investors, it added.
The company said that Legendary, which it acquired for $3.5 billion in January, should show its ability to turn a profit on its own prior to a merger. The Hollywood Reporter reported in May that Legendary had lost over $500 million in 2015. In Monday's statement, Wanda reiterated its expectation that Legendary would become profitable this year.
The company said it may reconsider the restructuring plan again in 2017. It will hold an investor presentation later in the week to clarify its plans.