Chinese Firm Abandons $100M Acquisition of Avi Lerner's Millennium Films
The agreement had been viewed with skepticism from the start, given the Chinese company's lack of experience in entertainment and local regulators' crackdown on outbound dealmaking.
The latest China-Hollywood dealmaking casualty has arrived: Avi Lerner's $100 million plan to sell majority control of Millennium Films to Beijing's Recon Group is officially dead.
The indie maverick unveiled the agreement in February, saying he would offload 51 percent of the studio, known for The Expendables and Olympus Has Fallen franchises, to Recon subsidiary Wenyuan Cable Co. The deal included Millennium’s library and gave Recon the option to buy out the remaining shares of Millennium at a later date.
But the Chinese firm reported to the Shenzhen stock exchange late Wednesday that the agreement had failed to meet an Aug. 31 deadline and was being aborted. The company cited difficulty satisfying local regulators' paperwork and disclosure deadlines. Wenyuan said it may instead seek "strategic collaboration" with Millennium.
Founded in 1996 by Avi Lerner and Trevor Short, Los Angeles-based Millennium was understood to have courted potential Chinese buyers for over a year.
The Recon deal was met with skepticism from the start, however, as Chinese regulators had begun a far-reaching crackdown on overseas investments by local firms several months prior. Although contracts were said to have been signed, many industry insiders in China doubted whether the plan could clear regulatory hurdles, which were then becoming more daunting by the week.
Wenyuan Cable's dearth of experience in the entertainment sector wasn't expected to help either. The company's principle business activity is described as the manufacture of industrial wires and cables. Recon chairman Tony Xia, a Chinese businessman who had little international profile prior to his surprise takeover of British soccer club Aston Villa in 2016, said he planned to remake the company into an entertainment concern. The Recon parent company is a conglomerate with businesses in healthcare, infrastructure and agriculture.
Regulators had grown suspicious of cross-sector transactions in the over-heated entertainment and sports industries though. In a similar head-scratcher late last year, an obscure Chinese industrial metals company announced, and later called off, a $350 million plan to buy Voltage Pictures, the Los Angeles-based production company behind Kathryn Bigelow's best-picture Oscar winner The Hurt Locker.
Since then, Beijing's clampdown on outbound dealmaking in key sectors has only increased. After months of indirect market signaling and encroaching curbs on investments described as "irrational," China's State Council laid out new rules on international activity earlier this month, labeling the film, entertainment, sports and tourism sectors as officially "restricted."