A pair of Chinese companies have unloaded their stakes in Dalian Wanda Group-owned Legendary Entertainment a year after a deal to take the “Kong: Skull Island” production company public unraveled.
According to first-half financial reports from the two public companies, China’s Oceanwide Holdings has sold a $217 million stake in Legendary, while Zhejiang Huace Film and TV Co. dumped its position in the company for $20 million. Wanda bought the shares back from Oceanwide and Zhejiang Huace as part of a deal that called for a 15 percent return if Wanda could not successfully take the company public.
It’s the latest financial blow for the massive entertainment conglomerate lost $500 million in 2016; founder and CEO Thomas Tull exited the company in January.
Wanda, owned by one of China’s richest men, Wang Jianlin, made its first splash in Hollywood when it acquired AMC Entertainment in 2012. Over the following years, Wanda aggressively added more worldwide entertainment assets, capped off by its $3.5 billion purchase of Legendary last year, for which it raised funds from other investors, including Oceanwide and Zhejiang Huace.
But China’s regulators began to crack down, tripping up Wanda’s $1 billion bid for Dick Clark Productions among other would-be mega-deals.
And last August, Wanda abandoned a reorganization plan that would have taken Legendary public through a merger with Wanda’s local cinema business after regulators raised concerns at the Shenzhen Stock Exchange.
Wanda eventually merged its Wanda Media company with its cinema business in July, but Legendary wasn’t part of that reorganization. A day before that, Wanda dumped its theme parks and 76 hotels in a $9.3 billion deal intended to reduce its debt after its multi-year acquisition spree.
China formalized its months-long de facto regulatory crackdown in August, officially restricting overseas deals in entertainment and forcing Wanda to look inward.
Bloomberg News first reported Oceanwide and Zhejiang Huace’s sales of its Legendary stakes.