Chinese billionaire WANG Jianlin’s Wanda Group, a real estate to entertainment conglomerate, is selling 12.77% shares worth USD 1.2 billion (RMB 7.8 billion) in its movie-theatre chain Wanda Film to e-commerce giant Alibaba and state-backed Beijing Cultural Investment Holdings, in a bid to shore up its balance sheet.
Following the deal, Alibaba will become the second largest shareholder in Wanda Film, paying RMB 4.68 billion for a 7.66% stake, while Wanda still controls a majority 48.1% stake in the company. Wanda Film owns and operates approximately 500 theatres and 4,000 screens in mainland China and controls about 14% of China’s box office – second only to the U.S. – which hit RMB 55.9 billion (approx. USD 8.9 billion ) in 2017.
The investment will privilege Alibaba and beef up Jack Ma’s role in China’s film industry. Previously, Alibaba has unveiled its ambition in the industry by establishing an entertainment arm, Alibaba Digital Media and Entertainment Group, in October 2016 and made a series of investment in media and film companies including Enlight Media (光线传媒), Huayi Brothers (华谊兄弟), Bona (博纳) and Steven Spielberg-founded Amblin Partners.
The tie-up will open the door for the future partnership between Alibaba and Wanda’s other showbiz units including Legendary Entertainment the Hollywood production company. They’ll also collaborate in areas including film distribution, movie investment, advertising and online ticketing.
The excessive user data of Wanda’s filmgoers could also expand Alibaba’s already huge data bank.
For Wanda, this move comes as part of the company’s plan to shift to an asset-light model and pay off debt. Since China has tightened its grip over international investment and outbound debt last year, the company has since reportedly sold billions of dollars in asset both in China and abroad.
For almost half a year, trading in Wanda Film has been suspended after its shares plummeted by 10%. After the company floated on the Shenzhen bourse in 2015, this is the company’s first share sale to external investors.
Through the deal, Alibaba is likely to help usher Wanda Film’s brick-and-mortar operation into the digital era.
Wanda is now joining efforts with China’s two largest tech giants, Alibaba and Tencent. One week ago, a Tencent-led consortium acquired a 14% stake in Wanda Commercial Properties.
According to a report by Wanda, the company reported an RMB 13 billion (approx. USD 2 billion) revenue in 2017, up 18% year on year. Its box office hit RMB 5 billion (approx. USD 813 million), accounting for 39% of its total revenue. The company also reported 210 million visits to its cinema, up 16% from a year ago.