Chinese actors watch films on their mobile phones during a break in the filming of a TV series on Aug. 10, 2015, in Hengdian, China. (Photo : Getty Images)
Wanda Cinema Line Co., a subsidiary of real estate giant Dalian Wanda Group, is seeking to acquire a 100-percent stake in Wanda Media for 37.2 billion yuan ($5.67 billion), the company said in a statement on Sunday.
The Shenzhen-based Wanda Cinema saw its shares skyrocket to the 10-percent daily limit on Monday and closed at 88.33 yuan per share right after it resumed trading. It was the company's first day of trading after shares were suspended in late February following a reorganization plan.
Before trading was suspended, Wanda Cinema was valued at 94.3 billion yuan. After the acquisition, its value is expected to reach 130 billion yuan, making it the biggest A-share media stock next to the Beijing--based tech firm Leshi Internet Information and Technology Corp, China Daily reported on Tuesday.
Founded in 2011, Wanda's cinema unit is China's biggest cinema chain with nearly 2,000 screens, while the film production and distribution operation has been taking in increased market share despite being a relatively new company.
Liu Cuiping, research director at EntGroup, told China Daily that the acquisition highlights Wanda's campaign to become a major player in the entertainment industry comparable to that of Hollywood.
"The company already has a mature business in every part of the industry chain, but Wanda also has a lot of big competitors in China, such as China Film Group Corp.," she said.
Wanda Cinema has also announced plans to raise as much as 8 billion yuan through a private placement, with the funds to be used for the construction of new cinemas and to boost the company's liquidity.
Currently, Wanda Cinema's main business centers on the downstream side of the film and television sector. Its operations include building and investing in movie theaters, as well as film distribution and screenings.
With the acquisition of Wanda Media, the company will be able to further expand its reach into film development and production, China Daily reported.
In January, Wanda Media spent $3.5 billion for a majority stake in Hollywood movie studio Legendary Entertainment, which produced international blockbusters such as "Jurassic Park," "Interstellar," "Godzilla," and the newly released fantasy epic "World of Warcraft." The studio said it plans to develop more sequels to its highly successful films, including "Godzilla 2" and a "Jurassic World" sequel.
In 2015, Legendary Entertainment suffered a loss of 3.6 billion yuan, while Wanda Media had a deficit of 3.9 billion yuan.
