{"id":20040,"date":"2012-05-21T18:24:58","date_gmt":"2012-05-21T10:24:58","guid":{"rendered":"http:\/\/www.chinahearsay.com\/?p=12891"},"modified":"2012-05-21T18:24:58","modified_gmt":"2012-05-21T10:24:58","slug":"yahoo-alibaba-and-amc-wanda-searching-for-a-china-ma-theme","status":"publish","type":"post","link":"https:\/\/www.chinalegalblog.com\/en\/2012\/05\/21\/yahoo-alibaba-and-amc-wanda-searching-for-a-china-ma-theme\/","title":{"rendered":"Yahoo-Alibaba and AMC-Wanda: Searching for a China M&A Theme"},"content":{"rendered":"

\"\"<\/a>The big China business news of the day is twofold: the acquisition of AMC Entertainment Inc. by Wanda, and the buyback of Alibaba shares from Yahoo. What’s the big picture here? I really can’t think of one. Sorry about that.<\/p>\n

Yes, I could do the old “China is growing,” or “Chinese companies have a lot of cash,” or even “China is coming to get you” (not normally something I would write, mind you). But really, none of these fit very well. There isn’t a unitary theme here. I know that lawyers, accountants, consultants and investment banks look at these deals and get stars in their eyes, hoping that a tidal wave of outward investment deals is coming their way and that they will be able to make a few bucks off the trend. But really, these two deals don’t tell us anything.<\/p>\n

Why not? Take a look at these deals. First, the USD 2.6 billion cinema chain acquisition. AMC is America’s second-largest theater group, and with the deal, Wanda will become the largest such company in the world. That’s pretty damn impressive for a Chinese company that folks outside of the Middle Kingdom never heard of. And it seems like AMC needed a Plan B, after making IPO noises three times in the past five years<\/a>:<\/p>\n

The Kansas City, Mo.-based theater chain had said in a regulatory\u00a0filing last spring\u00a0<\/a>that\u00a0it\u00a0planned\u00a0to raise up to $450 million\u00a0in\u00a0an initial\u00a0public offering of stock, using the proceeds to pay down debt. Top\u00a0shareholders in AMC include JPMorgan, Apollo Investment Fund and Bain Capital Investors.<\/p>\n

But at the prompting of AMC’s owners, the circuit has opted to\u00a0shelve the IPO, out of concern that market conditions aren’t\u00a0ripe for a stock offering[.]<\/p><\/blockquote>\n

The reaction to this deal has been mixed. Most of the attention has been on the nationality of the acquirer and the price tag, but apparently some folks<\/a> don’t see this as a match made in heaven:<\/p>\n

The deal marks the\u00a0largest investment to date by a Chinese company in the U.S. entertainment industry and gives\u00a0Wanda a foothold into the U.S. movie theater business in what some analysts viewed as a \u201ctrophy\u201d acquisition.<\/p><\/blockquote>\n

I assume the “trophy” reference suggests that prestige might have sealed this deal, as opposed to the usual M&A analytical factors. This quote doesn’t give me<\/a> a whole lot of confidence:<\/p>\n

Wang Jianlin, chairman and president of Wanda, said his goal was to own theaters covering 20 percent of the world theater market by 2020. Speaking through a translator on Sunday, Mr. Wang said his aim for the circuits was to \u201ccombine, and synergize and make them profitable.\u201d<\/p><\/blockquote>\n

If that’s the most intelligent, interesting quote that the New York Times\u00a0<\/em>could find, then Wang is either playing it very safe and boring (quite possible), or he just had little to say. You never know. I’m surprised he didn’t mention AMC’s history of innovation<\/a>, such as the 2004 launch of\u00a0MovieNachos\u00ae or the rollout in the ’90s of\u00a0LoveSeat\u00ae-style seating. Coming soon to a China theater near you? (Probably not.)<\/p>\n

Yes, this deal says something about Chinese firms snatching up U.S. companies held by folks that are looking for an exit. If we want to discuss Wanda alone, then maybe this can be fit into the Chinese overseas investment story. On the other hand, I’m not so sure how many AMC Entertainments there are out there. Moreover, there’s still a lot of Western money flowing over here, particularly into China’s entertainment industry. Mixed bag, says I.<\/p>\n

Regardless, whatever theme we might want to attach to the Wanda deal, Alibaba isn’t so easy. What’s different about Alibaba and Yahoo? Well, the story is a long one and quite ugly. If you want a very quick reminder on the stormy seven-year relationship between these parties, check out Isabella Steger’s Wall Street Journal<\/em> article<\/a>. Unlike the Wanda acquisition, this deal is not about a Chinese company flush with cash reaching out overseas. This is a buyback of shares that Yahoo purchased years ago, a deal that many called inevitable and that everyone was waiting on for a very long time. Bloomberg has details on what the deal means<\/a> for the two parties going forward.<\/p>\n

So why is Forbes going with this headline (“Yahoo, AMC Ride Chinese Corporate Investment Wave<\/a>“), an attempt to characterize these two deals as some overarching trend? Makes it more interesting, I suppose, but at the end of the day, there is nothing here to get too excited about. Each deal has its own particular backstory, and there is really no greater lesson to be learned.<\/p>\n

Perhaps the only characterization of these deals I can agree with from that Forbes article is the following: “And so capital flows west, and assets flow east.” With these two specific transactions, yes.<\/p>\n

\n

\u00a9 Stan for China Hearsay<\/a>, 2012. |\nPermalink<\/a> |\n3 comments<\/a> |\nAdd to\ndel.icio.us<\/a>\n\nPost tags: Alibaba<\/a>, AMC<\/a>, M&A<\/a>, mergers and acquisitions<\/a>, Wanda<\/a>, Yahoo<\/a>\n<\/small><\/p>","protected":false},"excerpt":{"rendered":"

Are these two deals more evidence that Western assets are under siege from an invasion of Chinese cash?<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[46,205,1426,395,194],"tags":[7762,2556,7968,2543,3718,2513],"class_list":["post-20040","post","type-post","status-publish","format-standard","hentry","category-alibaba","category-china-business-economy","category-ma","category-mergers-and-acquisitions","category-news-chinese-law","tag-alibaba","tag-amc","tag-ma","tag-mergers-and-acquisitions-2","tag-wanda","tag-yahoo"],"_links":{"self":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/20040","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/comments?post=20040"}],"version-history":[{"count":0,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/20040\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/media?parent=20040"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/categories?post=20040"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/tags?post=20040"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}