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.

Santa Monica, California based Lions Gate Entertainment Corp. is a Canadian/U.S.
entertainment company originally founded in Vancouver, British Columbia in 1997. The company then merged with Toronto Stock Exchange listed Beringer Gold Corp and subsequently sold its gold assets. Lions Gate then began buying companies to get into the film business, with its first acquisition, Cinepix Film Properties, a Montreal based company later renamed Lions Gate Films. The company then purchased a 45 percent stake in Mandalay Pictures. As of last year, Lions Gate was the seventh most profitable movie studio and the most successful mini major motion picture and television distribution company in North America.

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.

Other News About Lions Gate Entertainment
'Mockingjay' disarms 'Penguins' to retain top spot at U.S. box office
Movie takes in $58.9 million for the holiday weekend.
How A 'Hunger Games' Video Game Could Be Incredible
Forbes article on how a Hunger Games video game could be the next step in the movie franchise.

Other Stocks in the News
Amazon's new robot army is ready to ship
Company deploys 15,000 wheeled robots in its biggest warehouses.
Microsoft distances itself from Steve Ballmer
News of Ballmer's departure had Microsoft stock gain 7 percent.

Published on Dec 1, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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