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Legendary Denies Report Saudi Fund Mulling $700 Million Investment

UPDATED: Legendary Entertainment is hitting back at a report that Saudi Arabia’s Public Investment Fund may be exploring the possibility of acquiring a stake worth up to $700 million in the company.

A story in Reuters, citing unnamed sources, said that the Kingdom was weighing an investment and also claimed that the PIF is seeking to appoint an outside adviser to help it with the possible transaction.

Contacted by Variety, Wanda, the owner of Legendary, declined to comment.  However, a Legendary spokesperson told Variety that the company’s management “…has no interest in conducting a transaction w PIF.”

Until early last year, Wanda, under chairman Wang Jianlin, was the most expansionary Chinese firm in the media sector, buying majority control of the AMC and Hoyts exhibition chains and attempting to buy Dick Clark Productions for $1 billion. It acquired Legendary in January 2016 in a deal worth up to $3.5 billion. However, Wanda has come under severe pressure from the Chinese government to reduce its debts and to slash its foreign business portfolio.

Wanda is widely believed to be looking to rid itself of Legendary, which the government apparently regarded as an acquisition too far. But that task has been made harder by the heavy losses Legendary revealed in early 2017, a wave of executive departures, and the possibility Wanda would have to sell the company at a heavy discount. In the unlikely case that Wanda could keep Legendary’s value set at the 2016 level, a PIF investment of $700 million investment would buy it only a 20% stake.

Since the killing last month of journalist Jamal Khashoggi in the Saudi consulate in Istanbul, Saudi Arabia has been shunned by politicians and large parts of the creative community in the West. Hollywood talent management firm Endeavor, for example, is seeking to unwind the $400 million investment it has received from PIF. An investment by PIF could give Legendary a new path to growth, but many players might choose not to do business with a Saudi-backed company.

The PIF is an investor in Penske Media Corp. PMC is the parent company of Variety.

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