In the largest ever takeover of a US company by a Chinese investor, Dalian Wanda Group has bought US cinema chain AMC Entertainment Holdings. The acquisition makes the group the world's biggest cinema owner.
Dalian Wanda Group will purchase AMC Entertainment Holding for $2.6 billion (2.03 billion euros), and will invest another $500 million to fund "future initiatives," the Chinese conglomerate said in a statement Monday.
AMC, which is based in Kansas City, United States, operates 346 cinemas in the United States and Canada, while Danlian Wanda Group is a private Chinese property group operating hotels, department stores and tourism businesses, as well as 86 cinemas.
Wanda's investment is intended to ease AMC's financial problems created by high debt-servicing costs, as well as to allow major renovations of cinemas, including equipping theatres with the latest 3-D and IMAX technology.
"We have absolute confidence in the future of the company," said Wanda chairman Wang Jianlin at the signing ceremony, adding that he would support AMC to "become bigger" not only in the US, but in global markets, too.
Wang Jianlin founded Wanda Group in 1988 and was ranked China's sixth richest men last year, owning a personal fortune of $7.1 billion. The group created revenue of $16.7 billion in 2011.
AMC Chief Executive Gerry Lopez welcomed the "enthusiastic support" of Wanda, saying "the time has never been more opportune as the film and exhibition business continues its global expansion."
Spoils of growth
By the end of 2011, Chinese companies had invested $34.8 billion in United States industries, including car manufacturing, agriculture and steel production, economist Derek Scissors at the Heritage Foundation in Washington told the AP news agency.
The Wanda deal is the third largest, ranking behind 2007 investments of China's sovereign wealth fund CIC aimed at acquiring minority stakes in Morgan Stanley for $5 billion and in Blackstone for $3 billion.
The takeover comes as the Chinese and US entertainment industries seek greater access to each other's markets.
In February, DreamWorks Animation set up a Chinese joint venture to make films for China's domestic market, while in April Walt Disney announced an initiative to develop Chinese animation productions.
In addition, Disney said it would co-produce and partly film its Iron Man 3 movie in China with the help of DMG Entertainment.
However, imports of overseas movies on a revenue-sharing basis to China are currently limited to just 34 per year, although this figure was raised from 20 earlier this year.
uh/gsw (AP, dpa, AFP)