Dick Clark Productions has made it official: The $1 billion sale to China’s Dalian Wanda Group has been terminated.
DCP owner Eldridge Industries on Friday filed suit in Delaware Chancery Court to receive about $25 million in termination fee funds promised under the agreement reached in November. Both sides denied that the deal was in trouble last month when rumors first surfaced in late January. But earlier this week, there were internal signs at DCP that the deal was falling apart.
“Eldridge Industries announced today that one of its affiliates has terminated its agreement to sell Dick Clark Productions to the Dalian Wanda Group,” Eldridge said in a statement. “Wanda had agreed to acquire Dick Clark Productions in November 2016. Eldridge’s affiliate terminated the agreement this week after Wanda failed to honor its contractual obligations. Eldridge’s affiliate also has filed with the Delaware Chancery Court to compel release of the balance of escrowed funds to which it is contractually entitled given Wanda’s failure to consummate the sale.”
The next steps for DCP are not immediately clear. One source close to the situation predicted that the company will continue to operate autonomously within Eldridge Industries for the near term. The company was not actively engaged in shopping for a sale until the cash-rich Wanda conglom came forward with its eye-popping offer last year. Wanda’s interest was seen as part of its effort to stack up media and entertainment-related assets as well as find places to park its money as China’s economy hits a downturn.
According to the court filing, Wanda and DCP reached the acquisition deal in October, with the purchase price set at $1.07 billion with a closing date of Jan. 17. On Jan. 17, however, Wanda triggered a clause allowing the closing date to extend to Feb. 28, and as part of that process transferred $25 million to DCP from a $50 million escrow account set up as part of the transaction. DCP’s filing seeks the remaining $25 million in the account plus interest as called for in the reverse termination fee provision of the agreement.
Reps for DCP declined comment. Beijing-based Wanda could not immediately be reached for comment.
Wanda’s purchase of DCP is one of a handful of recent Chinese investments in Hollywood to hit an insurmountable roadblock as China’s government tightens its controls on the flow of capital outside of the country’s borders. Paramount Pictures is grappling with delays in receiving the coin from the slate financing deal it struck in January with Shanghai Film Co. and HuaHua Media.