Feb 12, 2019 (China Knowledge) - State-owned minority shareholder of Chinese conglomerate Dalian Wanda has decided to drop out of the company’s plans to consolidate its film and entertainment business, bringing the size of the deal down by nearly 10% to RMB 10.5 billion.
The newly modified deal will see Wanda Film acquire 95.77% of Wanda Media from its shareholders for RMB 10.5 billion, down from the 96.83% for RMB 11.6 billion that was previously announced. In addition, the transaction will be only for stock instead of cash and equity.
The dropout shareholder is a wholly owned subsidiary of Qingdao West Coast Development (Group) Co. which is wholly owned by the Qingdao State-owned Assets Supervision and Administration Commission. The company owns a 1.06% stake in Wanda Media.
Qingdao West Coast had decided to drop out of the deal due to its opposition over a capital reduction proposal by Wanda Media which would lower the company’s valuation to RMB 12 billion from RMB 16 billion which aims to benefit its medium and smaller shareholders.
In addition, an open assessment of Wanda Media’s valuation as of July 31st last year stood at RMB 11 billion, more than 30% lower than the RMB 16 billion it was valued at in 2016.
As part of the deal, Wanda Media has promised a net profit of no less than RMB 673 million for 2018 due to higher-than-expected box office revenue of its “Detective Chinatown 2”. The company has also said that its assets are of relative high quality and its earnings stable, allowing its shareholders to have their interests protected.
Wanda Media’s box office revenue growth is expected to slow down this year as it will only be participating in only one blockbuster movie this year and focus on smaller productions.
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