BEIJING/SHANGHAI (Reuters) – Chinese conglomerate Dalian Wanda’s proposed $1 billion purchase of Hollywood’s Dick Clark Productions Inc is under pressure but is not yet over, sources told Reuters, amid high U.S.-China tensions and tight scrutiny by Beijing on outbound deals.
An industry executive with indirect knowledge of the deal said it had hit hurdles but was not dead. A second person close to the deal said reports saying the deal was finished were off the mark, and that the parties still expected the deal to close.
Online entertainment news website The Wrap reported on Monday, citing two unidentified sources, that Wanda’s deal for Dick Clark had “fallen apart” over problems getting currency out of China and regulatory approval from the Chinese government.
Dalian Wanda declined to comment on the deal when contacted by Reuters. The sources told Reuters they were not authorized to speak with media on the matter and so declined to be identified.
If Wanda were to walk away from the deal, it would be one of the most high-profile outbound investments to fall by the wayside, though by no means the first. Anbang Insurance Group Co Ltd [ANBANG.UL] abandoned a $14 billion bid for Starwood Hotels & Resorts Worldwide last year due to “market considerations”.
Wanda, run by China’s richest man Wang Jianlin, said in early November it would buy all of Dick Clark, the company that runs the Golden Globe awards and Miss America pageants, as part of a major push into Hollywood.
It already owns Legendary Entertainment, co-producer of film hits such as “Jurassic World,” and U.S. cinema chain AMC Entertainment Holdings Inc <AMC.N>. It also has business ties with Sony Pictures Corp and Sony Corp’s <6758.T> film unit in China.
China’s government is trying to stem capital from leaving the country, which dealmakers have said is creating a hold-up for some deals because Chinese investors are unable to get the green light to transfer funds.
This follows a series of measures by authorities since late last year to tighten restrictions on capital outflows and rein in what officials have called “irrational” outbound investment.
However, a third person familiar with the deal told Reuters that while many Chinese firms were facing issues moving money out of the country, it wasn’t clear this was the main factor in any hold-up to the Dick Clark transaction.
“The deal faced severe scrutiny at the time from Congress and Wanda may now be reassessing its value,” the person said. Wanda has also faced hurdles getting Beijing’s approval for other investments in sports and entertainment, the person said.
The Dick Clark takeover had raised concerns among some U.S. lawmakers about China’s influence in Hollywood and the impact it might have on U.S. media, although Wang has said his interest in the company stemmed from business and not politics.
Dick Clark Productions was not immediately available for comment. Dick Clark’s owner, media investment holding company Eldridge Industries LLC, declined to comment.
(Reporting by Adam Jourdan in SHANGHAI, Matt Miller in BEIJING, Diptendu Lahiri in BENGALURU and Saqib Ahmed in NEW YORK; Editing by Tom Brown and Christopher Cushing)