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Dalian Wanda Group to Acquire Majority Stake in Legendary Entertainment; Big Step for China?

| Jan 07, 2016 06:04 AM EST

Dalian Wanda Group Chairman Wang Jialin

Dalian Wanda Group, a Chinese real estate and investment corporation, has made a deal to acquire a majority stake in Legendary Entertainment. The deal to purchase the studio behind "Godzilla" and "Pacific Rim" is valued at $3-4 billion.

According to China Entertainment News, CEO and founder of Legendary Thomas Tull has been pursuing Wanda's chair, Wang Jialin, since June 2015. The emerging relationship will give Legendary access to great margins of financing and a strong local partnership for venturing into China's highly regulated movie market, which reportedly will surpass North America as the globe's largest in 2017.

The deal might as well trigger another long-speculated association between Hollywood and Jack Ma's Alibaba Group, according to The Hollywood Reporter.

Affluent Chinese investors including Ma and Wang have been working hard to strike deals in Hollywood to capitalize on the country's growing box office. Moviegoers from China stormed into cinemas in 2015, sending ticket sales up by 48 percent to $6.75 billion.

Furthermore, these investors are on hot pursuit for content to satisfy the escalating local streaming services, besides diversifying their stakes in global markets beyond China.

On the other hand, American studios perceive China not only as a capital base but also as a customer. In Oct. 2015, IMAX raised about $250 million from its initial public offering in Hong Kong since the corporation wishes to expand in one of its major growth markets. Similarly, oriental DreamWorks expects big returns this month from "Kung Fu Panda."

With regard to Legendary Entertainment, insiders told the publication that the Wanda deal is serious, given the discipline reputation of the Chinese company. It is reported that Wang spent years as a regimental commander in the People's Liberation Army before his ascendance in the business world. He is reputable for his decisiveness and ambition.

In fact, the company took a big step to issue a press release last fall publicly denying media rumors that suggested it was almost acquiring United Kingdom cinema chain Odeon. Therefore, if Wanda does not issue a statement about the deal, it would be presumable that the Legendary agreement is true.

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