China's Dalian Wanda Group has agreed to sell a $1.24-billion minority stake of its cinema subsidiary Wanda Film to tech giant Alibaba Group and a government-backed investor, in the latest move by the Beijing-based property and entertainment giant to shore up its finances.
Wanda, run by billionaire Wang Jianlin, agreed to sell 13% of Wanda Film to Alibaba and Beijing-based Cultural Investment Holdings, which have become the unit's second- and third-largest holders, respectively, Wanda said Monday. Alibaba paid $743 million, while the state-backed fund paid $495 million.
Wanda remains the largest shareholder with about 48% of the subsidiary, which controls China's largest cinema chain. Wanda Film operates 516 theaters and 4,571 screens, accounting for 14% of China's growing film market, which is the world's second largest after the U.S. and Canada.
Separately, Wanda owns major U.S. entertainment assets not included in Wanda Film: the world's largest theater operator AMC Entertainment and "Dark Knight" production company Legendary Entertainment.
The deal comes as Wanda has been reducing financial risk to its business by unloading assets. The Chinese government has cracked down on large, highly leveraged companies to reduce risk to the nation's economy.
Wanda last month sold 14% of its commercial property business to a group of investors led by social media and gaming company Tencent. In July, Wanda sold hotel and tourism projects, along with its Qingdao-based soundstage business, to rival Sunac China Holdings.
However, Wanda said the latest sale was not just motivated by a need for cash. A partnership with Alibaba, which has also been making a push into the entertainment business, could offer advantages because of its vast reach among Chinese consumers, often drawing parallels to a combination of Amazon, Google and Netflix. Wanda said Alibaba will support Wanda Film's business with data and its online platform, Wanda said.
"[T]he goal in selling Wanda Film shares was to attract shareholders that had strategic value for the company, not merely for raising funds," the company said in a statement. "The synergy between the two strategic investors and Wanda Film will have long-term benefits for Wanda Film."
The deal is Alibaba Group founder Jack Ma's latest play in the entertainment industry, where his holdings include production company Alibaba Pictures, which invested in Steven Spielberg's Amblin Partners in 2016 and has bet on Hollywood movies such as Paramount's "Star Trek Beyond." Alibaba also owns a publishing company, a music arm, a video gaming division and Taopiaopiao, one of China's largest online ticket sellers.