Post by The Ultimate Nullifier on Mar 9, 2017 17:46:01 GMT -6
deadline.com/2017/03/wanda-group-near-decision-drop-dick-clark-productions-deal-1202039918/
Wanda Group Nears Decision To Drop $1B Dick Clark Productions Deal
Dalian Wanda Group’s $1 billion deal to buy Dick Clark Productions is near death’s door.
Barring an eleventh-hour change in the company’s thinking, we’re told it’s “highly probable” that Wanda will back away as soon as Friday. The company concluded that the price had become too high. The deal also could put Wanda in an uncomfortable position with Chinese officials who want to limit capital flight and U.S. lawmakers who warn that China is becoming too influential in Hollywood.
Wanda would have to pay a “very substantial” but unspecified break-up fee if it backs out of the deal it made in November for the production company behind the Golden Globes, the Billboard Music Awards, the American Music Awards, Dick Clark’s New Year’s Rockin’ Eve With Ryan Seacrest and other special events.
Wanda is believed to have enough funds outside China to buy Dick Clark from former Guggenheim Partners president Todd Boehly’s Eldridge Industries. At January’s World Economic Forum in Davos, Wanda Chairman Wang Jianlin said his company had earmarked $5B-$10B per year for overseas investment with the U.S. the top priority.
Wanda paid $3.5B last year for Legendary Entertainment while Wanda-controlled AMC Entertainment became the world’s biggest exhibition chain with a $1.1B acquisition of Carmike Cinemas and a $1.2B deal for UK’s Odeon & UCI Cinemas. In January, it agreed to pay $929 million for Nordic Cinema Group.
But the company appears to be reassessing how much more it wants to bet on Hollywood. “Wanda is simply backing out of a deal they don’t want to do,” says a film industry exec.
The company’s revenues dropped 14% in 2016. That was Wanda’s first decline in more than a decade and exceeded its forecast for a 12% drop. Meanwhile the value of shares in its Wanda Cinema Line exhibition chain have fallen more than 29% over the last 12 months.
The real estate giant delayed the Dick Clark deal in February, due at least in part to China’s effort to limit capital flight. Officials in Beijing fear that the country’s capital reserves will become depleted if companies use their cash to buy overseas properties as the value of the yuan declines vs the U.S. dollar.
“Every company in China is having a hard time getting money offshore right now,” a source says. “A tightening of controls has definitely happened.”
Last year the yuan depreciated 7% to its lowest exchange rate in eight years against the strengthening greenback. Among other things, officials in Beijing ordered several major banks to cut back on letters of credit.
Meanwhile, some U.S. lawmakers have become suspicious of Chinese investments in entertainment.
Rep. John Culberson (R-TX) wrote to Assistant Attorney General John Carlin in October asking him to examine Wanda. He also wanted the Justice Department to determine whether the Foreign Agents Registration Act (FARA) was being “effectively used as a tool to address foreign lobbying and propaganda efforts in the United States, especially by countries like China and Russia.”
President Trump also said during last year’s election campaign that he might levy a 45% tariff on Chinese imports. He charged that the PROC had taken jobs from the U.S.
A few days after he won the election in November, Trump spoke with China President Xi Jinping during a call in which Xi told his future U.S. counterpart that “cooperation is the only correct choice for China-U.S. relations.”
Wanda Group Nears Decision To Drop $1B Dick Clark Productions Deal
Dalian Wanda Group’s $1 billion deal to buy Dick Clark Productions is near death’s door.
Barring an eleventh-hour change in the company’s thinking, we’re told it’s “highly probable” that Wanda will back away as soon as Friday. The company concluded that the price had become too high. The deal also could put Wanda in an uncomfortable position with Chinese officials who want to limit capital flight and U.S. lawmakers who warn that China is becoming too influential in Hollywood.
Wanda would have to pay a “very substantial” but unspecified break-up fee if it backs out of the deal it made in November for the production company behind the Golden Globes, the Billboard Music Awards, the American Music Awards, Dick Clark’s New Year’s Rockin’ Eve With Ryan Seacrest and other special events.
Wanda is believed to have enough funds outside China to buy Dick Clark from former Guggenheim Partners president Todd Boehly’s Eldridge Industries. At January’s World Economic Forum in Davos, Wanda Chairman Wang Jianlin said his company had earmarked $5B-$10B per year for overseas investment with the U.S. the top priority.
Wanda paid $3.5B last year for Legendary Entertainment while Wanda-controlled AMC Entertainment became the world’s biggest exhibition chain with a $1.1B acquisition of Carmike Cinemas and a $1.2B deal for UK’s Odeon & UCI Cinemas. In January, it agreed to pay $929 million for Nordic Cinema Group.
But the company appears to be reassessing how much more it wants to bet on Hollywood. “Wanda is simply backing out of a deal they don’t want to do,” says a film industry exec.
The company’s revenues dropped 14% in 2016. That was Wanda’s first decline in more than a decade and exceeded its forecast for a 12% drop. Meanwhile the value of shares in its Wanda Cinema Line exhibition chain have fallen more than 29% over the last 12 months.
The real estate giant delayed the Dick Clark deal in February, due at least in part to China’s effort to limit capital flight. Officials in Beijing fear that the country’s capital reserves will become depleted if companies use their cash to buy overseas properties as the value of the yuan declines vs the U.S. dollar.
“Every company in China is having a hard time getting money offshore right now,” a source says. “A tightening of controls has definitely happened.”
Last year the yuan depreciated 7% to its lowest exchange rate in eight years against the strengthening greenback. Among other things, officials in Beijing ordered several major banks to cut back on letters of credit.
Meanwhile, some U.S. lawmakers have become suspicious of Chinese investments in entertainment.
Rep. John Culberson (R-TX) wrote to Assistant Attorney General John Carlin in October asking him to examine Wanda. He also wanted the Justice Department to determine whether the Foreign Agents Registration Act (FARA) was being “effectively used as a tool to address foreign lobbying and propaganda efforts in the United States, especially by countries like China and Russia.”
President Trump also said during last year’s election campaign that he might levy a 45% tariff on Chinese imports. He charged that the PROC had taken jobs from the U.S.
A few days after he won the election in November, Trump spoke with China President Xi Jinping during a call in which Xi told his future U.S. counterpart that “cooperation is the only correct choice for China-U.S. relations.”