Wanda Ups Price for Theme Park Sale as Second Buyer Joins Deal
Wang Jianlin's surprise move to sell off his Chinese theme parks and hotel holdings takes another twist as R&F Properties joins the transaction, and the terms change dramatically.
Dalian Wanda Group's surprise deal to sell its Chinese theme park and hotel businesses took another twist Wednesday.
At a hastily arranged press conference held in central Beijing, the real estate and entertainment conglomerate revealed that a second Chinese firm — Guangzhou-based property developer R&F Properties — would now be involved in the multibillion-dollar sell-off, which has been dubbed China's largest real estate transaction ever.
Last week, Wanda, headed by China's second-richest man Wang Jianlin, announced that it had reached a landmark agreement to offload the bulk of its theme parks and hotels to fellow property developer Sunac China for $9.3 billion.
But those terms were abruptly reworked Wednesday, with Sunac still onboard as the theme park buyer, but R&F emerging as the surprise acquirer of the hotels.
There were several curious nuggets among the new deal terms as well. Previously, Sunac had agreed to pay RMB 33.595 billion (about $5 billion) for 76 of Wanda's Chinese hotels, but under the new agreement R&F will pay just RMB 19.906 billion (approximately $3 billion) for 77 Wanda hotels — seemingly a colossal discount.
Sunac's price for the theme parks holdings was revised upwards though. The Tianjin-based property developer formerly agreed to pay RMB 29.575 billion ($4.4 billion) for a 91 percent stake in 13 Wanda theme parks, which the company calls "culture and tourism projects." Sunac will now pay RMB 43.844 billion (about $6.5 billion).
Overall, the value of the combined sale has jumped from $9.3 billion to $9.5 billion.
Top executives from all three firms were present at the event on Wednesday.
Wanda's Wang said Sunac had already paid RMB 15 billion ($2.2 billion) to his conglomerate for the theme parks, adding that Sunac would no longer borrow from Wanda to complete the deal, as had previously been announced, attracting scrutiny. Wang also revealed that the theme-park assets were more than RMB 45.4 billion ($6.73 billion) in debt, a burden that Sunac will fully take over under the terms of the sale.
Sunac chairman Sun Hongbin said his company had "plenty" of cash on hand, with RMB 90 billion ($13.32 billion) at its disposal. Sunac's shares tumbled on the Hong Kong stock exchange earlier this week, after it was revealed that Beijing regulators were reviewing the company's debt burdens and dealmaking, which included a risky $2.2 billion investment in troubled tech company LeEco in January.
Wang also revealed Wednesday that Wanda Commercial, his conglomerate's core property unit, has RMB 100 billion ($14.8 billion) of cash on hand, not including the additional funds coming from the Sunac and R&F deals.
R&F Properties is a mid-sized real estate firm based in southern China. The company partnered with Wanda late last year to develop shopping centers.