From 100% to 0.002%, Wang Jianlin’s class for Hollywood is over.
Editor’s note: This article is from the WeChat public account “Yifan Finance” (ID: finance_yifan), author: Zheng Yijiu.
Wang Jianlin can’t wait any longer.
Wang Jianlin’s dream of transnational and international super chain cinemas has finally woke up.
On May 23, Wanda Group issued an official notice announcing that: As of May 2021, Wanda Group has all withdrawn from the board of directors of AMC, retaining only a minority stake in AMC, and has recovered a total of US$1.476 billion. Among them, from 2014 to 2020, Wanda has accumulated a dividend of US$326 million as a shareholder. In 2018, it recovered US$500 million through the transfer of shares to Silver Lake Capital. Therefore, this year’s consecutive sales amounted to nearly US$650 million.
A document submitted by AMC to the U.S. Securities and Exchange Commission (SEC) on May 21 shows that Wanda currently only holds 10,000 shares of AMC Cinemas, and its shareholding ratio has been reduced to 0.002%. This shareholding ratio is probably still Not as many as some large retail investors on Reddit, indicating that Wanda has basically cleared AMC, and the two parties are good to get together.
In fact, almost every month last year there was a voice that Wanda was about to sell AMC theaters. After all, under the new crown epidemic, the theaters business could be described as a heavy loss, and until today, a year later, the North American theaters have not yet been completed. restore.
Picture source: network
Therefore, it seems that the outside world is not surprised when it comes to the complete liquidation and sell-off. AMC’s stock price has soared by 13% compared with the previous day after the news came out.
According to the book, dividends and stock cashing finally allowed Wanda to recover the capital that had doubled its actual investment, but it is difficult to say how much Wanda really earned from this nearly ten-year transaction. After all, it is operational. The investment has not been clarified.
The timing of this liquidation is obviously hard to say, especially as the epidemic in the United States has receded and the summer “retaliatory viewing” is approaching, the effect of simply being a “waiting for the party” for investment income is undoubtedly effective. It would be better, but obviously the heavy burden of domestic business makes Wang Jianlin unable to wait any longer.
01 From 100% to 0.002%, Wang Jianlin finished his Hollywood lesson
OverseasIn the matter of acquisition, Wanda was not in the limelight at the time, but it was always the one that made big news. Especially in the film and television entertainment industry, most of the acquisition targets are in Hollywood, making the overall exposure amazing.
Wanda Group’s acquisition of AMC Cinemas as a whole is one of the most explosive.
In May 2012, Wanda Group acquired AMC Cinemas in the United States. The total transaction value of the merger and acquisition reached 2.6 billion U.S. dollars, of which 700 million U.S. dollars was used to acquire 100% equity of AMC Cinemas, and 1.9 billion U.S. dollars was AMC debt. AMC is responsible for it. At the same time, Wanda also promised to invest US$500 million in equipment upgrades for the AMC cinema circuit. Of course, in hindsight, the money did not seem to be honored.
At the beginning of the acquisition, Wanda Group and AMC Cinemas quickly entered a “honeymoon period”. Behind this is actually the most frequent stage of exchanges between the two major film markets in China and the United States, and the film markets of both sides have maintained impressive growth. After the completion of the transaction, Wanda Group has both the world’s second-ranked AMC theater and Asia’s first-ranked Wanda theater, becoming the world’s largest movie theater operator.
On the other hand, after receiving financial support from Wanda, the debt-ridden AMC cinema line turned losses into profits that year, and then ushered in a series of territory expansion. In December 2013, AMC was listed on the New York Stock Exchange. In the following years, AMC almost copied Wanda Cinema’s domestic ideas, borrowing to acquire Carmike, Odeon, UCI Cinemas, and Nordic, becoming the world’s largest cinema company. However, the main business of AMC theaters remains in the North American market.
The Wanda team and AMC management gathered together on the New York Stock Exchange
Of course, the main source of income for AMC Cinemas is actually the same as Wanda Cinemas, one is box office revenue, and the other is food and beverage sales. The prerequisite for the two main businesses to generate profits is that someone comes to the theater to watch the movie. However, according to statistics from the National Association of Theatre Owners, the total box office of North American theaters in 2017 actually began to show a negative growth: In 2016, the total box office of North American theaters was 11.372 billion US dollars, while in 2017 only 11.091 billion US dollars, and the total box office decline also occurred in Under the premise of an increase in average fares. Against this backdrop, the share price of AMC, the largest cinema company, fell in response.
But when AMC’s stock price was really high, Wanda didn’t choose to sell at all.Equity, obviously at that moment, Wanda really wanted to operate this investment as a long-term business. Instead, after entering 2018, Wanda began to transfer a large number of AMC shares to Silver Lake Capital, withdrawing 500 million US dollars in cash, and then continuously reducing its holdings. Therefore, it is not so much that Wang Jianlin’s investment vision is unique, but it is a continuation of the strategic contraction that Wanda, which has been under heavy pressure since 2017.
Since then, any news about Wanda and AMC is basically no longer good news. Crisis in cash flow, bankruptcy and reorganization, and finding a takeover party have basically become key words in the relationship between the two companies.
It can be said that the new crown epidemic in 2020 has given the two sides the best stage for a peaceful breakup.
02 Reddit retail investors fight Wall Street bears, Wanda borrows the slope to go down the donkey
Like the data given above, the theater business has been in decline in recent years. Of course, as a relatively passive distributor, the performance of theaters is also largely affected by the ups and downs of the studio’s creation. But the more important factor is of course the rise of streaming media. As the largest theater in North America, AMC theaters have been in direct confrontation with streaming media giant Netflix many times.
The new crown has stepped on the last throttle for this paradigm shift.
In the context of the continuing escalation of the epidemic in the United States in 2020, the film industry was forced to press the pause button, theaters were closed, film festivals were postponed, and films were withdrawn. AMC theater business suffered heavy losses, and news of bankruptcy and liquidation continued to spread.
According to the AMC 2020 financial report, the net profit attributable to ordinary shareholders of the parent company during the period was -4.589 billion US dollars, a year-on-year decrease of 2977.87%; operating income was US$1.242 billion, a year-on-year decrease of 77.29%. In the first three quarters of 2020, AMC had net losses of US$2.176 billion, US$2.738 billion and US$3.643 billion respectively. For the entire year of 2020, AMC’s stock price plummeted by more than 70%, while the S&P 500 index rose by 16.26%.
AMC’s 2020 Annual Report
The dramatic turning point occurred at the beginning of 2021—US stocks retail investors battle Wall Street shorts, and AMC, one of the short-selling targets, took off.
Because retail investors on social media platforms such as Reddit bought shares that have been madly shorted by institutions, such as Game Station and AMC, the stock price of AMC has soared in a short period of time., The increase was as high as 477%, and on January 27, it hit a new high of more than US$20 since June 2017, which is almost equivalent to nearly 7 times the closing price of US$2.97 a week ago.
That is, during the period, Wanda Group carried out an equity conversion, converting its Class B ordinary shares into Class A ordinary shares, “to allow it to sell ordinary shares.” Although the announcement at the time did not show that Wanda had a sale, the equity conversion under the chaos finally cleared the obstacles for continuous shipments and final clearance.
But as mentioned in the previous article, every time Wanda sells AMC equity, it is difficult to say that it is at the best time for return on investment. Overall, it is more like an emergency sell-off that has to withdraw funds due to domestic business pressure. Lift.
On the one hand, US stocks have entered a cyclical transition, and technology growth stocks are no longer sought after. With the recovery of the real economy, institutional investors have turned their attention to the real consumption field.
On the other hand, the North American film market is recovering rapidly. In mid-to-late March, various regions in the United States began to allow theaters to open. According to the Q1 financial report of AMC Cinemas, as of March 31, 2021, the company has reopened 585 theaters, including New York and Los Angeles, the two largest ticket warehouses in North America, under the premise of complying with the epidemic prevention policy. As vaccines gradually enable the United States to achieve herd immunity, offline entertainment will only recover faster. After a year, the North American film market will finally usher in the summer vacation.
The epidemic has also significantly improved the relationship between the theaters and the streaming media giants. Netflix’s new zombie film “Army of the Dead” was screened a week in advance in Cinemark, one of the three major theaters in North America. This is also the first time that Netflix has worked. Performing theater distribution on such a large scale.
A still from “Army of the Dead”
It can be said that there is a high probability that the theater chain will enter a new stage in the future. The window period will be greatly shortened, but it will be able to have more diversified content. After all, Netflix alone has surpassed several major productions in one year. The sum of the studios. In the long run, the cinema business may have new vitality.
It’s just that Wanda and Wang Jianlin have been reluctant to wait for more than a month. After all, Wanda’s domestic film and television business is also facing huge challenges. Wanda Films alone has lost more than 11 billion yuan in the past two years, and Wanda Group The road to deleveraging has not come to an end. It is undoubtedly an extravagant hope to imagine the dream of Hollywood entertainment empire at this time.
When you really want to evaluate this business about Wanda’s sale and purchase of AMC, perhaps it is more appropriate to borrow two words from the Wall Street Journal columnist Jacky Wong: “Due to the amazing turn in the final stage, Wanda’s Hollywood adventure Finally ushered in a satisfactory ending. Although the ending was satisfactory, the main thing is good luck.”