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Wanda in talks to buy European cinema operators

By Huang Ying  (China Daily)

14:03, April 09, 2013

Dalian Wanda Group Corp Ltd, one of China's leading property developers and the owner of the country's largest movie theater chain by box office revenue, is in talks to buy a European theater chain, a company spokesman said on Monday.

The move comes several months after the Chinese conglomerate's $2.6 billion acquisition of the United States' second-largest theater chain, AMC Entertainment Holdings Inc, which operates 346 multiplex theaters with more than 5,000 screens in the US and Canada.

The spokesman declined to elaborate.

However, sources close to the deal said that Dalian Wanda has shown interest in at least two of the largest chains on the continent - Odeon & UCI Cinemas Holdings Ltd and Vue Entertainment Ltd, which are both based in the United Kingdom and run thousands of screens in a number of countries.

After the AMC acquisition, the Chinese company became the world's largest theater operator. It operates a total of 495 theaters with about 6,000 screens, taking up 10 percent of the global market share.

In China, the company owned 115 theaters with about 1,000 screens at the end of last year, and it plans to expand to 200 theaters with 2,000 screens by 2015.

If it succeeds in buying a major European theater chain, it would be easier for the company to access superior resources in Hollywood to develop co-productions with foreign counterparts, said Shao Gang, consulting director at EntGroup Consulting, a Beijing-based entertainment research and consultancy firm.

"It would increase the company's bargaining power when it negotiates with Hollywood studios on issues such as box-office revenue sharing deals," Shao said.

Odeon & UCI Cinemas is the largest operator of theaters on the European continent, with 2,179 screens in 236 cinemas in seven countries, including the UK, Spain and Germany. It is owned by Terra Firma Capital Partners Ltd, a British private equity firm, which combined Odeon and UCI in 2004 after paying $1.3 billion for both. The firm attempted to sell the theater chain in 2011 and is expected to do that again soon.

A person close to the talks said that Wanda has also approached Vue Entertainment, but that the UK company is not interested in a deal, according to the Wall Street Journal.

Vue Entertainment operates 1,150 screens in 120 cinemas in five European countries and in Taiwan.

"I don't think it's a good deal for Wanda to purchase overseas theater chains, because China is showing much more potential for market growth in the film industry compared with the market in North America and Europe," said Huang Qunfen, general manager of Beijing New Film Association Co Ltd, one of China's largest theater chains.

The world's second-largest movie market, China generated $2.7 billion in box office revenue in 2012, grabbing nearly 8 percent of the global market, while North America accounted for a 31 percent share with $10.8 billion in ticket sales, according to the Motion Picture Association of America.

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