You will be redirected back to your article in seconds

BEIJING — Real estate giant Wanda gave a powerful indication of China’s growing biz muscle with the $2.6 billion purchase of U.S. theater chain AMC Entertainment to become the world’s biggest cinema owner.

The Hollywood-China relationship is getting warmer, Chinese companies are hungry for overseas assets, and the combination of the strong renminbi currency and the still-expanding economy have given the Chinese the edge when it comes to shopping overseas.

The move for North America’s second-biggest chain of movie houses is the largest ever purchase of a U.S. company by a Chinese corporate, and by far the most significant step by a Chinese enterprise into the U.S. movie theater market. The acquisition includes about $2 billion in assumed debt.

“We outlined our goal to build Wanda into a top notch international company,” Wang Jianlin, the billionaire founder of Wanda, told a news conference in Beijing.

“This acquisition will help make Wanda a truly global cinema owner, with theaters and technology that enhance the moviegoing experience for audiences in the world’s two largest movie markets,” said Wang, who was China’s richest man last year according to a local magazine, although the more reliable Hurun Rich List pegs him sixth.

With the purchase of AMC, Wanda overtakes Knoxville-based Regal Entertainment Group in revenue terms, but it is not done yet — Wanda is now reportedly looking for a European cinema operator to add to its armory.

The Kansas City, Missouri-based AMC, operates 346 multiplex theaters mostly located in major US and Canadian cities with a total of 5,034 screens. It is controlled by private-equity firms including Apollo Global Management, Carlyle Group, Bain Capital and Spectrum Equity Capital.

The deal will involve no management changes, the h.q. would remain in Kansas City and the transaction would have no impact on AMC’s employment levels or business strategy.

Wanda, based in Dalian, northeast China, owns 86 movie theatres in China, with 730 screens, while it also has interests in production and distribution. Annual revenues are $16.7 billion, while it controls $35 billion in assets.

In February, China bowed to pressure from Hollywood to allow more foreign films, increasing the quota of revenue-sharing foreign films from 20 per year to 34, of which 14 will be 3D, Imax or toons, and a profit-sharing increase from 13% to 25% for foreign shingles.

This could be a major boon for Chinese distribs as it means there is more decent content available.

“The number of imported movies is going up and that’s a trend,” said Wang.

The deal was contingent on regulatory approval, but movie houses are not politically sensitive and it’s hard to see regs standing in the way.

North American moviegoers spent $10.2 billion on tickets last year, but topper Gerardo Lopez said AMC had difficulties in servicing its debts in 2011 because of the low number of quality movies coming out of Hollywood.

“The first five months of this year have been great, with great attendance. This March was the biggest March ever, with ‘The Lorax’ and ‘Hunger Games,’ while early May we had ‘The Avengers,’ ” said Lopez.

Relations between the U.S. and Chinese movie industries have been getting positively cosy since China agreed in February to open its market to more American films, with DreamWorks Animation announcing a landmark deal in the same month to build a production studio in Shanghai.

China’s biggest acquisition of a U.S. company until now was Lenovo’s $1.8 billion takeover of IBM’s personal-computer business in 2005.

In a separate deal which further highlights China’s growing power in the corporate sphere, Alibaba Group, China’s largest e-commerce provider, agreed to buy a stake of about 20% in itself from U.S. Web portal Yahoo! Inc. for $7.1 billion.

Yahoo acquired 40% of Alibaba in 2005 in exchange for $1 billion and ownership of the U.S. company’s Chinese operations.

Wanda had been talking to AMC for several years, but negotiations stepped up a gear since the real estate boom in China forced a stark rise in the number of theaters in China and swelled Wanda’s cash war-chest for acquisitions. AMC also backed away from plans to go public, making way for takeover talks to continue.

After notching up more than $2 billion last year, Chinese B.O. is expected to exceed that of the U.S. within the next three years and this year has seen major bonding between the U.S. and China shingles.

Disney, DreamWorks Animation and News Corp have all announced co-production partnerships.

Wang said there would be no special treatment for Chinese movies when it came to distribution in the U.S. He said that quality remained a problem when it came to finding Chinese content to distribute.

“If ‘Avatar’ was produced in China that wouldn’t have been a problem,” he said.

Wanda was planning to boost its production business to make better movies in China.

“If some production by Wanda qualifies for sure we will help promote it,” he said. However, final say on what movies get shown in the U.S. would be with Lopez.

Wanda is also planning to keep growing locally. Wang said Wanda had applied for the third license to distribute foreign movies in China — currently only the state-owned China Film Group and Huaxia have import licenses.

“Wanda is one of the strongest companies and in terms of fairness, we are entitled to a license and we are applying. It will be decided by the authorities,” he said.

Wanda is rarely out of the headlines in China these days as the government is trying to ease fears of a real estate bubble.

Less prominent in the heavily censored domestic press have been Wang’s links to Bo Xilai, the purged former Communist Party chief of Chongqing who served as mayor in Dalian, Wanda’s home town. Bo’s wife has been arrested in connection with the murder of a British businessman.