Jan. 05--Dalian Wanda Group, the Chinese media and real estate conglomerate, is in advanced talks to buy the U.S. studio Legendary Entertainment, a person familiar with the matter said.
Wanda is closing in on a deal to acquire a majority stake in Legendary for at least $1 billion, said the source, who was not authorized to comment publicly on the negotiations.
Legendary's best known films include last year's hit "Jurassic World," as well as "The Dark Knight" and "The Hangover" movies.
Legendary already has a significant presence in China, where it has an agreement to co-produce movies with the powerful state-owned China Film Co. The co-productions include the big-budget science fiction movie "The Great Wall," the upcoming Universal Pictures release starring Matt Damon. A deal with Wanda would give Legendary a stronger foothold in a market expected to surpass the size of the North American box office by 2017.
At the same time, a deal with Legendary could significantly boost the ambitions of Wanda -- China's largest cinema company -- to expand into film production. Parts of "The Great Wall" were filmed in the eastern Chinese city of Qingdao, where Wanda is building Wanda Studios Qingdao. The company bills the facility as "the world's largest film and television studio."
Spread across more than 400 acres, the development will house 30 purpose-built sound stages, a permanent facsimile of a New York City street, a temperature-controlled underwater stage, the country's largest exterior water tank and post-production facilities. The first phase of the studio is scheduled to open in 2017, and the company is seeking to lure both Chinese and international productions to the facility.
Last spring, Wanda touted the studio at Cannes and the AFCI locations show in Los Angeles -- where it was the only Chinese company to attend -- and Nancy Romano, chief operating officer of Wanda Studios Qingdao, said at the time that productions would be eligible for "extremely generous" incentives. For the studio's launch ceremony in 2013, Wanda flew in numerous Hollywood celebrities including Leonardo DiCaprio and John Travolta to give the event some high-wattage star power.
Beyond boosting Wanda's Chinese production business, the Legendary sale would further expand Wanda's foray into the U.S. entertainment industry. The company made headlines in 2012 when it acquired AMC Entertainment, owner of the nation's second-largest movie theater chain, for $2.6 billion.
The sale would put Legendary under the control of Wang Jianlin, one of China's richest men, who has previously telegraphed his desire to expand Wanda's investments in the U.S.
In 2013 the company donated $20 million to the Academy of Motion Picture Arts and Sciences for its film museum on the Los Angeles County Museum of Art campus. A year later, Wanda bought the site of the former Robinsons-May department store in Beverly Hills and announced plans for a $1.2-billion mixed-use development there.
A spokesman for Wanda declined to comment. Representatives of Legendary could not be reached.
Reuters, which first reported on the pending deal, said the transaction values Legendary at $3 billion to $4 billion.
Japanese telecommunications firm SoftBank Group Corp. and investment firm Waddell Reed Inc. have also agreed to sell their stakes in the company, Reuters said.
Wang has repeatedly emphasized his desire to go global and signaled he intends to do that through mergers and acquisitions. "We seek to become a world-class multinational company and a famous brand," he said at the company's semi-annual meeting in July, telling investors that doing so "is also a core element of our transformation" from being simply a real estate company.
He forecast that by 2020, 30% of the company's revenue would be from overseas, and said that overseas merger and acquisition activities would increase in 2016. Wanda is looking in particular at "cultural industries," sports and finance.
Last year, Wanda acquired the Swiss sports marketing company Infront Sports Media for more than 1 billion euros, purchased the organizer of the Ironman Triathalon races for $650 million, bought a 20% stake in the Atletico de Madrid soccer club, and took over Australia's second-largest cinema chain, Hoyts, for about $365 million.
"I have studied the history of the world's top 500 companies. ... Top 500 companies are constantly changing but they have one thing in common -- none of them reached such a scale entirely through their own development. All of them have engaged in mergers and acquisitions," Wang said at the investors' meeting. "To rapidly become a world-class [multinational company], Wanda can only take one path in its overseas development and that is to mainly depend" on mergers and acquisitions.
Wanda Studios Qingdao is part of what is known as the $8.2-billion Qingdao Oriental Movie Metropolis -- a mega-development slated to include a theme park and entertainment center, a 4,000-room resort-hotel, a shopping mall, a 300-berth yacht club and a wax museum. Such amenities might make Qingdao a more appealing place for Western productions to spend weeks or months filming.
Wang has spoken repeatedly of his desire to create a vertically integrated entertainment company spanning production, distribution and exhibition. Wanda Pictures and its recently launched Wuzhou Film Distribution subsidiary distributed 14 films in 2015, including "Mojin: The Lost Legend," which has raked in nearly $239 million in mainland China since opening in mid-December.
"There's no single company in the whole world that has a big-scale production base, and at the same time has screening and distribution channels," Wang told the British newspaper the Telegraph after announcing the Qingdao studio project. "Wanda Group is the first one in the world."
Verrier reported from Los Angeles and Makinen reported from Beijing.
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