Dalian Wanda Group to Buy Stake in Lions Gate Entertainment (LGF)
Shares of Lions Gate Entertainment Corp. (LGF) were up +1.10 or +3.24 percent to $35.00 per share in Monday's premarket trading, after news that Chinese conglomerate, the Dalian Wanda Group confirmed it was in talks with Lions Gate about acquiring a stake in the company. Lions Gate Entertainment Corp. closed at $33.90 per share, up +0.51 or +1.53 percent in Friday's regular trading session.
Beijing, China based Dalian Wanda Group Corporation Limited is a large conglomerate with interests in tourism, hotels, real estate and entertainment. The company is owned by Wang Jianlin, whose family owns 100 percent of the company directly and through its holding company, Dalian Hexing Investment Company. The company bought U.S. based theater operator AMC Theatres in May of 2012 for $2.6 billion and claims to be the world's largest cinema operator.
According to sources familiar with the matter, the talks are in early stages and may not lead to a deal. Dalian Wanda Group is said to be seeking a controlling stake in the $4.7 billion Lions Gate studio. Nevertheless, Lions Gate's owners are reluctant to sell more than a minority stake.
In addition, Dalian Wanda Group had also held discussions with Metro Goldwyn Mayer Inc., another independent film production company best known for James Bond films. Neither Lions Gate or MGM have commented on the talks with Dalian Wanda.
Dalian Wanda Group's owner, Chairman and Chief Executive, Wang Jianlin said that, "Many people come knock at my door, but Wanda is only interested in the big players and we want control, Wang continued saying, "China's movie industry is booming at unprecedented speed. Buying a well-known U.S. company will help our distribution overseas. He added that, "We are shifting our group's focus toward culture, entertainment and e-commerce, China's movie industry is growing a lot faster than that of the U.S.
Wang Jianlin will join with Fosun International Ltd and Alibaba Group Holding Ltd. (BABA), two other large Chinese companies interested in investing in the Hollywood film business. Wang Jianlin also said that he is looking to acquire a large European theater network in his bid to control 20 percent of the global cinema market by 2020.
Lions Gate stock is reacting favorably to this morning's news. The stock was hit hard last week after a disappointing opening for the company's third movie in the Hunger Games series, "The Hunger Games: Mockingjay - Part 1 . The movie took in an estimated $123 million in its first weekend, significantly lower than the $152 million and $158 million the first two movies took in on their first weekend.
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