China's Wanda to Consolidate Film Units

Wang Jianlin China Brand Summit GETTY H 2016
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The Chinese conglomerate will inject its film production units, including Legendary Entertainment, into movie theater unit Wanda Cinema Line, whose stock trades on the Shenzhen Stock Exchange.

Chinese conglomerate Dalian Wanda Group is planning a major restructuring of its film assets, according to a document filed by the company with regulators

According to the filing, Wanda plans to inject its movie production subsidiary Wanda Pictures into its publicly traded movie theater unit, Wanda Cinema Line Co., whose stock trades on the Shenzhen Stock Exchange. Wanda Pictures comprises Wanda’s domestic Chinese movie-production business. Legendary Entertainment, which the Chinese conglomerate agreed to buy for $3.5 billion in January, is expected to become part of Wanda Pictures as soon as the deal closes.

The document further stipulates that Qingdao Wanda Pictures — the Wanda unit currently constructing a sprawling state-of-the-art movie production facility in the Eastern Chinese port city of Qingdao — will also be merged into Wanda Cinema Line.

The stock of Wanda Cinema Line was halted from trading in Shenzhen on Feb. 24 pending the announcement of an acquisition. The targets of that acquisition are now clear. The filing document says that Wanda will reveal further details of the deal on April 8. 

Wanda had expressed interest in pursuing an IPO for its movie production unit for over a year. In February, leaked documents revealed that Wanda was seeking $1.5 billion of outside investment in Wanda Pictures ahead of an IPO, backdoor stock listing or asset injection into another publicly listed company under the conglomerate's control. The terms of the offer indicated that Wanda Pictures would be valued at $5.37 billion (RMB35 billion) upon flotation. 

Wanda Group's billionaire founder Wang Jianlin personally owns a 20 percent stake in Wanda Pictures. Wanda Culture, which includes Wanda theaters, AMC Entertainment theaters and other entertainment assets, owns 55 percent, and the remaining 25 percent is held by Wanda Group.