Take Two … And Action! Chinese Acquirer Shifts Purchase Strategy for Hollywood Studio

A publicly listed Chinese company is dropping its $100 million deal to buy small movie producer Millennium Films, coming under pressure as Beijing steps up a campaign to clamp down on overseas investments it considers excessive and frivolous.

Instead, the purchase will proceed under another private entity controlled by Tony Xia, whose Shenzhen-listed Recon Wenyuan Cable Co. Ltd. had previously agreed to buy the studio in a deal that made headlines in February.

Xia disclosed the change in strategy in a Twitter post, responding to a media article about the shift surrounding the studio, whose credits included the action film series “The Expendables” and the fourth “Rambo” film.

“We changed (to) another entity not pub(licly) listed (to) continue the deal as the new Chinese policy of film industry restriction,” said Xia, also known as Xia Jiantong, in the post on Thursday. Last year Recon led another group that purchased Britain’s Aston Villa soccer club.

Entertainment and sports have become favorite areas for Chinese overseas buying over the last three years, leading to a spree of acquisitions that included sports clubs, sports management companies, Hollywood studios and theater chains. But Beijing has recently clamped down on such purchases as part of a broader campaign to stem capital outflows.

One of the biggest acquirers had been Wanda Group, whose purchases included Hollywood studio Legendary Entertainment and several major movie theater chains in North America and Europe. But one of the company’s most recent deals to buy midsize studio Dick Clark Productions for $1 billion collapsed earlier this year, reportedly in part due to difficulty moving adequate funds outside China.

More recently, Wanda, which started as a real estate developer, announced the surprise sale of its China-based chains of theme parks and hotels for 63.75 billion yuan ($9.7 billion), in a move that observers said might reflect its need for cash after a major buying spree over the last five years.

Contact reporter Yang Ge (geyang@caixin.com)