Chinese entertainment giant Wanda Group is in final negotiations to buy a majority stake in Legendary Entertainment, the Hollywood studio run by Thomas Tull that has built a substantial, multi-genre content operation from a base of fantasy and gamer franchises, according to an individual familiar with the situation.
Talks to complete the deal have not concluded but the Chinese company would buy out the stake of two other investors in a deal that values the company at between $3 billion and $4 billion, said the individual, who declined to be named when speaking about confidential talks.
The deal would give the Chinese conglomerate — which owns Wanda Cinemas, AMC Entertainment and vast real estate holdings — another major foothold in the U.S., beyond AMC, the No. 2 theater chain in North America. The deal would leave Legendary founder and CEO Thomas Tull in charge of the company and with a substantial minority ownership interest, the source said.
While many Chinese-American partnerships in the entertainment industry have been announced only to later fall apart, Wanda’s earlier success in acquiring AMC makes its circling of the film company appear more likely to bear fruit. The Chinese conglomerate’s owner, Wang Jianlin, is that nation’s wealthiest man and is said to be intent on spreading his influence across industries ranging from sports, to hospitality, to theme parks and entertainment.
Wanda clearly has the financial power to pull off the deal. One of its subsidiaries, Wanda Cinema Line, is listed on the Chinese stock market and recently had a market capitalization of $20.3 billion, some nine times larger than that of AMC. The company also recently announced plans to give stock market listings to two of its movie subsidiaries in production and distribution.
Legendary previously has had multiple flirtations, and a few marriages, with Chinese companies. The Hong Kong-based exhibition chain Golden Harvest acquired a small minority stake (3.33%) in 2010 for $25 million. It sold the stake a year later for $30 million. Later the same year, Legendary was in advanced talks with Hong Kong construction firm PY Engineering to be the principal Chinese financier of the studio, Legendary East. Though the deal fell through, Legendary East is in post production on its first film, the $150 million “The Great Wall,” helmed by standout director Zhang Yimou.
In another move to share the risk on its big budget pictures, Legendary in September announced that China’s Tencent Pictures would take an equity stake in Legendary’s “Warcraft.” The film is based on the video game “World of Warcraft” and is set to debut on June 10.
Variety first reported news of a possible Wanda/Legendary deal last month, with Reuters breaking the news of the pending transaction roughly a month later, on Monday. Spokesmen for Legendary and Wanda declined to comment.
Japan’s SoftBank, which is understood to be selling its stake in the transaction, also declined to comment.