Breaks were applied again on Dalian Wanda’s buying spree when Chinese regulators placed on hold the Chinese conglomerate’s planned acquisition of Dick Clark Productions over capital flight concerns. A few weeks back, American legislators also questioned the snapping up by Chinese companies of entertainment businesses in the U.S.
Approval Delayed
Financial Times reported that the regulator did not reject the acquisition of the company behind the Golden Globe Awards and Miss America pageant but only delayed the approval, citing people familiar with the deal. In the last 18 months, Chinese companies invested heavily in chemical, financial, sports and entertainment ventures overseas, noted the regulators in Beijing.
In November, the Ministry of Commerce and China’s foreign exchange regulator warned Chinese banks that purchases by companies in China of assets outside its primary business could be blocked by the government. In December, the ministry specifically pinpointed deals related to property and entertainment as among those it would scrutinize.
Tracking Irrational Investments
Due to the large amount of money that have left China because of the overseas acquisition, the Chinese regulator said in December that it would begin to track irrational investments abroad. Data from Thomson Reuters said that in 2016, Chinese acquisitions, led by Dalian Wanda and HNA Group, agreed on $220.4 billion in acquisitions which represents 16 percent of global cross-border activity.
Reuters noted that if the Dalian Wanda deal with Dick Clark would not push through, it would be one of the largest and high-profile outbound investments to fail. In 2016, the Anbang Insurance Group did not pursue its $14 billion offer to purchase Starwood Hotels & Resorts Worldwide because of market considerations.
Before the regulator placed on hold Dalian Wanda’s planned acquisition, the Chinese conglomerate had acquired Legendary Entertainment and AMC Entertainment Holdings, a U.S. cinema chain.