Dalian Wanda buys Legendary Entertainment as Grindr gets Chinese money

The Deal
By Laura Board
January 13, 2016

 

Chinese companies targeted bastions of American established and new media on Tuesday as China, undeterred by its stock market rout, continues its outbound dealmaking.

Wang Jianlin’s property and services conglomerate Dalian Wanda Group Co. Ltd. confirmed a widely anticipated deal to buy film studio Legendary Entertainment for up to $3.5 billion, adding a content producer to Wanda’s film distribution capacity.

The Burbank, Calif. target has pushed out blockbusters including the Batman trilogy, Jurassic World and The Hangover and its films have grossed more than $12 billion in bock office receipts. Its shareholders include Japan’s SoftBank Group Corp, which in October 2014 pumped in an initial $250 million for an undisclosed stake reported at the time to be near 10%.

Chairman and CEO Thomas Tull will remain in place as Legendary prepares to release its Warcraft film, which is based on Blizzard Entertainment’s top-selling game. In a statement Wang said the new owner will help Legendary expand in China.

“The acquisition of Legendary will make Wanda Film Holdings Company the highest revenue-generating film company in the world, increasing Wanda’s presence in China and the U.S., the world’s two largest markets,” he said. “Wanda’s businesses will encompass the full scope of film production, exhibition and distribution, enhancing Wanda’s core competitiveness and amplifying our voice in the global film market.”

Dalian Wanda has been energetically diversifying away from property in recent years.

In the film sector Dalian has owned cinemas group AMC Entertainment Holdings Inc. in the U.S. since a $2.6 billion deal in 2013. Last June it agreed to buy Australian cinema chain Hoyts Group from Chinese businessman Sun Xishuang for an undisclosed sum.

Last year Dalian Wanda also bought sports companies on both sides of the Atlantic.

In August it struck a $650 million agreement to buy World Triathlon Corp. from Providence Equity Partners and last February it paid €1.05 billion ($1.14 billion) for Zug, Switzerland-based Infront Sports & Media AG. A year ago Dalian Wanda entered the Spanish soccer industry with a deal to pay €45 million for a 20% stake in Club Atlético de Madrid.

Dalian Wanda’s China-listed Wanda Cinema Line Co. Ltd. closed up almost 3% on the Shenzhen exchange. It has a market value of 122.1 billion renminbi ($18.6 billion) and is one of several listed Dalian Wanda entities.

Legendary Entertainment chief operating officer and general counsel Marty Willhite led the deal for the film producer. Willhite, a former Munger Tolles & Olson LLP partner, also oversaw the 2014 SoftBank investment.

Separately on Tuesday games developer Beijing Kunlun Tech Co., which, like Wanda Cinema Line, is listed on the tech-heavy Shenzhen stock exchange, agreed to buy a 60% stake in gay social network service Grinder LLC in a deal that values the U.S. business at $155 million.

In a blog post, Grindr CEO and founder Joel Simkhai said: “For nearly seven years, Grindr has self-funded its growth, and in doing so, we have built the largest network for gay men in the world. We have taken this investment in our company to accelerate our growth, to allow us to expand our services for you, and to continue to ensure that we make Grindr the number one app and brand for our millions of users.”

Simkhai and other employees will hold the remaining shares in Grindr.

Beijing Kunlun held an IPO a year ago and was founded by chairman Zhou Yahui.

As of Tuesday’s close it had a market value of Rmb41.1 billion after its shares closed up more than 10%.

Chinese companies struck $84.2 billion of outbound deals last year and the country by transaction numbers was the fourth-largest outbound acquirer. On Monday China National Chemical Corp. agreed to pay €925 million for Onex Corp.-backed KraussMaffei Group, a Munich-based maker of machinery.

External advisers on the Legendary/Dalian Wanda deal include Raine Group LLC ‘s John Salter for Legendary, where a Lazard team led by Simon Furie and Ajay Yadav advised the Legendary board.

Legendary’s legal advice came from a Latham & Watkins LLP team including Joseph Calabrese, David Zaheer and Robert Haymer.

A Simpson Thacher & Bartlett LLP team including Michael Nooney and Katharine Moir advised the Legendary board.

Dalian Wanda’s advisers include Irell & Manella LLP’s Joshua Grode, Michael Kaplan, Mitch Cohen, Elliot Freier and Sam Kozhaya.

David Marcus contributed to this report.