China's Wanda Offers Piece of Legendary Pictures to Local Investors (Report)

2012-23 REP Wang Jianlin H

Wang suggests decentralizing film approvals.

The conglomerate is looking to raise $1.5 billion for its film unit Wanda Pictures, which includes Legendary and domestic Chinese movie businesses.

Just one month after its $3.5 billion acquisition of Legendary Pictures, Chinese conglomerate Dalian Wanda Group is offering a slice of the studio to domestic Chinese investors.

According to a report in the Wall Street Journal, Dalian Wanda Group is seeking to raise $1.5 billion for its movie subsidiary Wanda Pictures, which comprises Legendary and domestic Chinese production and distribution businesses. The Journal says it got a look at a document prepared as part of the offering, which values Wanda's film unit at $5.36 billion, which is about 32 times its expected 2016 earnings. The document states that Legendary is expected to contribute 73 percent of Wanda Pictures's earnings and 80 percent of total revenue this year.

Legendary has co-financed such blockbusters as The Dark Knight and Jurassic World, as well as producing its own slate of hits (Pacific Rim, 2013; Godzilla, 2015) and misses (Crimson Peak, 2015; Seventh Son, 2015). Upcoming tentpoles include the role-playing game adaptation Warcraft, due out in May, and Kong: Skull Island, coming in 2017. The studio's monster action pictures have a strong track record in China.

Wanda's billionaire chairman Wang Jianlin has previously indicated that he intends to take the film unit public, as he did last year with the company's movie theater chain Wanda Cinema Line, listing it on the Hong Kong Stock Exchange. The leaked offering document stipulates that Wanda Pictures will go public later this year, through an IPO, backdoor listing or an asset injection into another listing vehicle controlled by Wanda Group. If the company fails to go public within one year, Wanda Culture Holding Co. is guaranteeing that it will buyback shares from investors, paying a 15 percent annualized interest rate.

Wanda's myriad investments in Chinese film began to pay off handsomely last year. With blockbusters such as Mojin: The Lost Legend ($254 million) and Goodbye Mr. Loser ($228.5 million) leading the way, the studio racked up grosses of $1.05 billion (RMB6.7 billion) for the year, the most of any private film company in China, according to box office monitor Ent Group.

Chinese companies — with Wanda most prominent among them — have been on a global buying spree amid a slowdown in growth at home. In addition to Legendary Pictures, Wanda Group last year acquired Swiss sports-marketing company Infront Sports & Media AG for $1.2 billion and World Triathlon Corp., organizer of the Ironman Triathlon, for $650 million.

During an address at Oxford University in the U.K. on Tuesday, Wang said Wanda is planning to announce another "major deal" on Friday. The chairman added that the company is eyeing a second "comprehensive" project in the U.K. entertainment sector that would create some 10,000 jobs.

A representative from Wanda declined to comment.