Dalian Wanda Group acquires AMC and becomes the world's largest cinema chain (picture)

Dalian Wanda Group acquires AMC and becomes the world's largest cinema chain (picture) Reprinted A company that started out relying on real estate has embarked on the path of "de-real estate...

Reprinted

A company that started out relying on real estate has embarked on the road of "de-real estate". Yesterday morning, Dalian Wanda Group signed a merger agreement with AMC Cinemas, the world's second-ranked American theater company, to transform into "the world's largest cinema chain operator" at a total cost of US$3.1 billion. For this identity change, Wanda paid a lot of money, and the amount has set a new record for overseas mergers and acquisitions by Chinese private enterprises. The total transaction value of M&A reached US$2.6 billion, including the purchase of 100% equity of AMC and the assumption of debt. Wanda has promised that it will invest no more than US$500 million in operating funds after the merger. This part of the funds will mainly be used for theater upgrades and debt repayments. Dalian Wanda Group was founded in 1988 and is involved in five industries: commercial real estate, hotels, tourism investment, cultural industries, and department store chains. Since 2005, Wanda has begun investing in the cultural industry and has entered five industries including the Central Cultural District, large-scale stage performances, film production and screening, chain cultural entertainment, and Chinese calligraphy and painting collections. Its cultural industry investment has exceeded 10 billion yuan, making it the enterprise with the largest investment in China's cultural industry. The American AMC Theater Company has a history of 92 years and is the second largest theater chain group in the world. In 2011, its revenue was approximately US$2.5 billion, with approximately 200 million moviegoers and approximately 20,000 employees. The company owns 346 theaters with a total of 5,028 screens. Among them, there are 120 IMAX screens and 2,170 3D screens. It is the largest IMAX and 3D screen operating company in the United States. The theaters owned by AMC are concentrated in the centers of large cities in North America and own 23 of the top 50 theaters with the highest box office in North America. "Although AMC has been losing money in the past two years, after our evaluation, we found that it was mainly because the debt ratio was too high and there were no operational problems. From January to April this year, AMC has started to make profits." Wang Jianlin, chairman of Wanda Group, said the above about AMC's debt issue that the industry is concerned about. After the merger, Wanda will retain the original AMC brand and team and will not replace it with the Wanda Cinema brand.

During the one-and-a-half-hour signing ceremony and press conference, Wang Jianlin did not mention the development direction of the real estate industry. Instead, he positioned culture, tourism and retail as the three main industries in the future. In these aspects, Wanda will adopt a two-pronged approach of mergers and acquisitions and direct investment. "We are also seeking to acquire other large theater chains in Europe and the United States. Wanda plans to occupy about 20% of the global film market by 2020," Wang Jianlin said.

It is understood that Wanda Group began to negotiate mergers and acquisitions with AMC shareholders and management in the first half of 2010. In March this year, the project information report was confirmed by the National Development and Reform Commission. After the two parties sign the contract, Wanda Group will complete the corresponding approvals from relevant Chinese government ministries and commissions. At the same time, the transaction was officially completed after obtaining approval from relevant U.S. government agencies.