(WSJ) The $1 billion purchase of Dick Clark Productions Inc. by Dalian Wanda Group of China has stalled amid Beijing’s clampdown on capital leaving the country, according to people familiar with the matter.
The high-profile acquisition—Dick Clark produces the Golden Globes, the American Music Awards and other awards shows—was announced Nov. 4, with Dalian Wanda heralding it as “a big step forward in expanding Wanda’s map in the entertainment industry.”
The deal still hasn’t closed, however, and The Wrap entertainment-news website reported Monday that it was dead, citing two individuals familiar with the matter.
A person close to Eldridge Industries, which is selling Dick Clark Productions, told The Wall Street Journal that Eldridge still expects the deal to close. That person and another person familiar with the matter said the closing had been tied up by the Chinese government’s scrutiny of money leaving the country.
A Wanda spokesman declined to comment.
The stall comes as Chinese regulators increase their scrutiny of Chinese companies seeking to invest overseas, part of a push to stem the rising flow of money out of the country.
A person who works on Chinese deals for overseas media assets said his firm has run into similar problems since late last year as regulators have virtually halted the approval of any overseas transactions valued at more than $1 million.
The sale of Voltage Pictures, the Los Angeles independent filmmaker behind the award-winning movies “The Hurt Locker” and “Dallas Buyers Club,” was scrapped in December because of regulatory scrutiny after a Chinese metals manufacturer said it would acquire it for at least 2.4 billion yuan ($349 million).
Chinese companies spent a record $225 billion last year for overseas purchases. Beijing keeps tight controls on money flowing out of China, concerned such capital flight will potentially shake confidence in China’s economy and increase pressure on the yuan to weaken. That has led to greater scrutiny of overseas acquisitions to ensure they aren’t being made to evade capital controls.
Not all deals have stalled. In January, a Chinese chemicals company successfully navigated through Beijing’s capital controls to close a $1 billion deal to buy U.K.-based Outfit7 Ltd., the developer of the Talking Tom Cat entertainment mobile app. The chemicals company, Zhejiang Jinke Entertainment Culture Co., formed a Hong Kong company to buy the app developer. That Hong Kong company then resold it to Jinke.
Dalian Wanda, controlled by China’s richest man, Wang Jianlin, made its mark as a commercial-property developer but has more recently branched out into entertainment. Wanda’s buying spree has already included “The Great Wall” producer Legendary Entertainment and AMC Entertainment Holdings Inc., the world’s largest movie-theater operator.
The purchase of Dick Clark Productions, founded by the late “American Bandstand” host in 1957, marked the Chinese company’s first foray into television. The $1 billion price tag drew attention in Hollywood, because several potential suitors had recently valued the company at hundreds of millions of dollars less.
Mr. Wang is believed to be interested in starting his own awards shows in China. When the deal was announced, Wanda said Dick Clark Productions management would remain in place after it closed.
Source: Wall Street Journal by Erich Schwartzel and Wayne Ma