Movie chain in talks with China firm
LOS ANGELES — AMC Entertainment, the United States’ second-largest movietheater chain, is negotiating a deal to sell all or part of itself to Wanda Group, owner of China’s largest theater company, two people familiar with the talks said.
The deal, if concluded, would make Wanda the first Chinese company to establish a major foothold in the North American theatrical business. AMC operates 5,048 screens in 347 theaters in the U.S. and Canada. It would also give AMC access to China’s burgeoning market, which is in the midst of a multiplex building boom and was No. 2 at the international box office last year behind Japan, accounting for $2 billion in ticket sales, according to the Motion Picture Association of America.
The talks between AMC and Wanda have intensified in recent weeks in the wake of AMC’S move to pull the plug on a planned stock offering to raise up to $450 million and use the proceeds to pay down debt, according to sources who asked not to be identified because the negotiations were confidential. Top shareholders in AMC include Jpmorgan, Apollo Investment Fund and Bain Capital Investors.
AMC withdrew the offer because of concerns that market conditions weren’t ripe for a stock offering, and possibly to position the company for a sale, people close to the transaction said.
A spokesman for AMC declined to comment, as did a representative for Wanda. News of the talks with Wanda was first reported by The New York Times.
Wanda Cinema is the largest cinema chain in China. The parent company, Wanda Group, is a major player in real-estate development including department stores and hotels.
The company has been in the news of late because its chairman, Wang Jianlin, is reportedly under investigation for ties to ousted Chongqing party chief Bo Xilai. Bo was sacked, accused of corruption, and his wife charged with the murder of a British businessman. Wanda’s headquarters are in the northeastern city of Dalian, where Bo was once a senior official.
AMC posted a loss of $82.7 million on revenue of $1.93 billion in the 39 weeks that ended Dec. 29, 2011, compared to a profit of $36.88 million on revenue of $1.9 billion during the same period in 2010, according a filing with the Securities and Exchange Commission. The company cited higher interest expenses, investment losses in 3-D technology company Reald Inc., and costs related to its acquisition of Kerasotes.
In May 2011, AMC closed a deal to acquire 92 theaters and 928 screens from Chicago-based Kerasotes Showplace Theatres, the nation’s sixthlargest movie chain.
China has been expanding its entertainment industry to enhance the country’s global influence, or “soft power,” and to feed the demands of a growing middle class. Several Hollywood studios have been maneuvering to take advantage of the opportunity to expand in China.
Burbank-based Walt Disney Co. recently said it would work with the animation arm of China’s Ministry of Culture and China’s largest Internet company to help develop China’s animation industry. Glendale-based Dreamworks Animation has announced a venture with Shanghai Media Group to build a family-entertainment company to produce animated and live-action movies and TV shows for the Chinese market.