The move is being effected through a reverse takeover involving Shenzhen Stock Exchange-listed Sichuan Gaojin Foods, a pork and meat processor.
The deal, which involves Gaojin issuing shares to buy up the larger DMG, implies a valuation for DMG of RMB6.01 billion ($970 million).
Following the share issue, Peter Xiao Wenge, DMG’s chairman and biggest shareholder will become the largest individual shareholder of the listed company.
DMG began as an advertising and television commercial production company, but has also invested in local Chinese film production (Ning Hao’s “No Man Land”) and has handled distribution of certain imported Hollywood independent titles including “Twilight”, “Resident Evil 4,” and “Knowing”.
It co-produced “Iron Man 3” (pictured) with Disney and Marvel and hatched an enhanced Chinese version of the blockbuster.
“Transcendence” was co-produced with Alcon Entertainment and DMG recently arranged a PR blast for star Johnny Depp in Beijing. While the film disappointed at the North American box office, it performed strongly in China earning an estimated $11.4 million over the three days from Friday to Sun (April 18-20).
Numerous other Chinese media and entertainment companies, including state-owned Shanghai Film Group and privately owned Wanda Cinema Line, are also seeking stock market listings. Many have had their plans delayed by a government moratorium on IPOs that lasted for over 18 months. While the ban on new listings has now been lifted there is now a Securities Commission-enforced queue.
DMG’s backdoor listing allows it to get ahead of the queue. It is not clear whether the process allows DMG to raise fresh capital, though that is a possibility after the listing is completed. The deal is subject to regulatory approvals which may take a matter of months.