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The $2.6bn acquisition of US cinema chain
AMC Entertainment this week sent a shockwave through Hollywood and highlighted how Chinese financial firepower is changing the landscape even for industries, such as entertainment, where China has barely emerged on the world stage.
The deal also introduced a bold new player in global M&A: Dalian Wanda, a real estate group headed by the colourful tycoon Wang Jianlin, a former soldier who is now China’s sixth-richest man. Wanda, a conglomerate that spans five-star hotels, tourist resorts and shopping malls, is China’s largest cinema owner by revenues. The deal with AMC will make it the largest cinema owner in the world.
AMC has been struggling financially for years, but Mr Wang told the Financial Times that he plans to turn that round by paying down AMC’s heavy debt load, which is about $2bn. As part of the deal he has also committed to spend a further $500m over the next two years, which will be invested in theatre refurbishment and advertising.
“The crucial thing is to keep the enthusiasm of the current management and the workers,” he says. “You have to put human factors first.” Mr Wang says that the most important part of the deal was securing an agreement to keep more than 40 senior managers at AMC in place after the takeover.
He is also betting that a US economic recovery will help AMC profits pick up. “America’s economic fundamentals and the country’s overall trend are picking up,” he says. “We are confident that after the acquisition we will realise profits.”