Avi Lerner Says Millennium Sale to China Not Dead Yet
The Chinese conglomerate Recon aborted its $100 million plan to acquire 51 percent of Lerner's Millennium Films, which received a payment that now becomes a breakup fee: "The company's richer by $20 million."
Don't cry for Avi Lerner just yet.
Although Chinese conglomerate Recon Group announced Aug. 30 that it was aborting its $100 million plan to acquire 51 percent of his Millennium Films, Lerner isn't fazed. "The company's richer by $20 million," he tells THR, suggesting that Recon's only installment payment — received in May and followed by repeated delays — now becomes a breakup fee.
Because of the difficulty of closing deals in China's increasingly strict regulatory climate, U.S. negotiators have sought hefty breakup fees when engaging in M&A activity with Chinese firms. But even by current standards, Lerner's return is steep. Dalian Wanda Group, for example, paid out $50 million when its $1 billion buyout of Dick Clark Productions went south in March.
Recon owner Tony Xia tweeted that reports that the deal was dead were "not accurate," noting he's using another nonpublicly traded Recon entity to work around regulators. "Tony Xia is a great guy; I trust him," says Lerner, adding that he's taking Millennium off the market for now. "Maybe they'll come back in October when all this sorts itself out."
Lerner is assuming that China's foreign dealmaking clampdown may relax after the 19th Party Congress convenes Oct. 18, but others are skeptical. "This crackdown is cloaked in financial necessity terms and also seems driven by internal political considerations, so it's anyone's guess how long it will continue," says one veteran American banker based in Beijing. Adds Akin Gump attorney Christopher Spicer, "I don't see the regulatory climate changing that soon."
This story first appeared in the Sept. 6 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.