Chinese conglomerate Dalian Wanda Group has bought U.S. film studio Legendary Entertainment for about $3.5 billion, turning its chairman into a Hollywood movie mogul as China's richest man steps up a drive to diversify his business empire overseas.
At a news conference in Beijing on Tuesday, Wanda Chairman Wang Jianlin said he plans to package Legendary, behind hits like Jurassic World, with existing movie production assets in China and sell shares in the merged operation in an initial public offering.
The move makes Wanda the first Chinese firm to own a major Hollywood studio—a sign of the country's growing power in the global movie world, industry watchers said.
The executive gave no further details on the IPO plan, but said he was acquiring Legendary Entertainment for both intellectual property reasons and the studio's movies. A person familiar with the matter told Reuters earlier this month a deal to secure a majority stake in Legendary had been agreed on.
"Wanda Cinema already has made tremendous development in China, but it isn't enough," said Wang, whose personal wealth is estimated by Forbes magazine to be about $27 billion. "Movies are global, and our company certainly wants to add our voice to the world film market."
The deal is Wanda's biggest overseas acquisition ever and comes as Wang accelerates a drive to diversify a giant with 2015 revenue of $44 billion away from its core, but slowing domestic property operations. With deals to buy into everything from financial services to Spanish soccer club Atletico Madrid, Wanda said on Monday revenue rose 19% last year.
Under the deal announced on Tuesday, Wanda said it will buy an unspecified majority stake in Legendary. As part of the transaction, Legendary's founder and CEO Thomas Tull will continue to head up the movie maker.
Founded in Dalian, a city on China's northeast coast, and now based in Beijing, Wanda is already the world's biggest movie theater operator, having bought AMC Entertainment, North America's second-largest cinema chain, for $2.6 billion in 2012. It also owns Australian movie theater company Hoyt's Group, and Wanda Cinema Line, the group's domestically listed firm, is the biggest theater operator in China.
"The deal reflects the emergence of China as the next generation of Hollywood investors and represents a shift from Japan," said Dan Clivner, co-managing partner and media M&A attorney at Sidley Austin in Los Angeles.
Wang said that the Legendary's intellectual property—with prospects for movie tie-in promotions—would add value to its motion picture and television production business. That would lead to greater opportunities for joint production, he said, while bolstering its tourism and cultural businesses also.
China's booming movie industry, fueled by the country's growing urban middle class, saw box office revenue increase 49% last year and exceeded 40 billion yuan ($6.1 billion) for the first time, according to data from the State Administration of Press, Publication, Radio, Film, and Television.
In 2013, Wang, flanked by Hollywood A-listers like Leonardo DiCaprio and Nicole Kidman, broke ground on a 50 billion yuan "motion-picture city" project in the eastern city of Qingdao, demonstrating his ambition to build China's own version of Hollywood.
Attending Tuesday's Beijing news conference, Legendary's Tull told reporters that he would continue to run daily operations, and that Wang had been "insistent we run operations and continue to run things the way we always have."
Founded in 2000, Legendary has made hits such as The Dark Knight and Man of Steel, as well as The Hangover film franchise.
Legendary generally provides half the financing for movies whose budgets can run up to $200 million or more. It also has an agreement with China Film, the largest and most influential film company in China, to co-produce movies.
Both Wang and Tull dismissed concerns that Wanda's investment would lead to censorship or alter the content of its motion pictures.
"I'm a businessman," said Wang. "I buy things to make money, so I don't really think about government priorities. My main consideration is commercial interest."
Tull said that Legendary had already built up a brand in China with its blockbusters and wasn't looking to change its content.
"Frankly, we make movies that we want to see and thankfully they work here in China."