Dalian Wanda Group would not pursue its plan to buy Dick Clark Productions for $1 billion. However, the change in plan could cost the Chinese entertainment giant a huge but unspecified break-up fee if it does not go ahead with the purchase offer made in November.
Deadline Hollywood cited various reasons why Dalian Wanda backed out of the offer, mainly financial issues. It has a $2 billion note that would be due soon to investors from whom it borrowed to buy in 2016 Legendary Entertainment for $3.5 billion. At the same time, Dalian Wanda also bought for $1.1 billion Carmike Cinemas and for another $1.2 billion Odeon & UCI Cinemas in UK. The conglomerate also agree in January to buy the Nordic Cinema Group for $929 million.
American & Chinese Scrutiny
The deal is also being scrutinized by American legislators wary of the growing influence of Chinese entertainment giant on content of Hollywood movies and is also facing capital flight issues in China. But the entertainment website pointed out that outside China, Dalian Wanda has enough money to buy Dick Clark Productions which produces the Golden Globes, Billboard Music Awards and American Music Awards.
In January, Wang Jianlin, chairman of Dalian Wanda, said at the World Economic Forum in Davos that the conglomerate had allocated between $5 billion and $10 billion annual for investments overseas, with the U.S. as its top priority. However, Deadline Hollywood added that Dalian is withdrawing the offer after it realized Dick Clark Productions only owned the production rights to the Golden Globes and not Golden Globes itself.
Eldridge Terminates Deal
On Friday, Eldridge Industries, owner of Dick Clark Productions, terminated the deal which reportedly has a potential break-up fee of $25 million on top of the $25 million that Dalian Wanda paid in January for the extension of the close date. In a statement, Eldridge said it terminated the agreement after the Chinese giant failed to honor its contractual agreement.
Forbes added that an affiliate of Eldridge filed with the Delaware Chancery Court to release the balance of Escrow fund that the company is contractually entitled because of Dalian Wanda’s failure to push through with the sale.