Dalian Wanda Rides China's Financial Merry-Go-Round with Latest Deal

Tammy Harvey
July 12, 2017

Chinese conglomerate Wanda Group, owner of Hollywood's Legendary Studios, is selling most of its theme parks, retreating from a business it once said would challenge Walt Disney Co.

The surprise sale gives Wanda possible revenue to pay down debt that has soared during an aggressive expansion into entertainment, tourism and other consumer businesses. After Disneyland opened its first theme park in China previous year, Mr Wang announced plans to build 20 theme parks with Chinese characters by 2020, of which 15 would be in China and five overseas.

The company posted revenue growth of 17.9 per cent in the first half of this year to 134.8 billion yuan (S$27.5 billion).

"Shedding these so far unprofitable assets would not only reduce the company's debt ratio, highlighting the asset-light model, but also raise its chance of being listed as a non-property company", said Yan Yuejin, an analyst with E- house China R& D Institute.

Take this week's megadeal involving one of China's most indebted firms, property developer Dalian Wanda Group.

Dalian Wanda has not explained its thinking behind the sale, but the firm is heavily in debt.

About the author Steven Schwankert is an award-winning editor and reporter with over 20 years of experience in Greater China, focusing on culture, media, exploration, and technology. "Wanda Commercial plans to pay back the majority of bank loans within this year", he was quoted saying.

But they have reversed course as concerns grow over capital flight, a weakened Chinese currency, and potentially unsound acquisitions.

Wanda said other domestic companies that invested aggressively overseas also were being scrutinised, including Rossoneri Sport Investment Lux, a consortium that recently purchased Italian football club AC Milan, Club Med's owner Fosun Group, and HNA Group.

Notably, the merger will not include US movie studio Legendary Entertainment, which Wanda acquired for $3.5 billion in early 2016.

Sunac's shares surged 13.65 percent, their biggest one-day gain in more than two-and-a-half years, on Tuesday.

Sunac and Wanda are expected to sign an agreement by the end of this month.

Sunac yesterday halted trading of its shares in Hong Kong pending an announcement of a "very substantial" acquisition, it said.

Other reports by Ligue1talk

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