Published: Tue, July 11, 2017
Global | By Maureen Mccoy

Dalian Wanda deal: Why is China's 'Disney rival' being sold?

Dalian Wanda deal: Why is China's 'Disney rival' being sold?

S&P downgraded Wanda Commercial in December citing rising financial leverage and slower-than-expected asset disposal at China's largest commercial developer.

Dalian Wanda announced Sunac would pay 63.2bn yuan ($9.3bn) for 76 Wanda hotels, as well as taking a 91% stake in 13 of Wanda's tourism projects in China, which usually include theme parks and leisure complexes.

"Through this asset transfer, Wanda Commercial's debt ratio will be greatly reduced, all the proceeds will be used to repay loans".

It is thought that the deal will go towards reducing Wanda's commercial debt pile.

Last year Disney opened a theme park in Shanghai, its fourth outside the United States after Paris, Tokyo and Hong Kong.

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With the latest deal, Sun targeted assets from fellow-billionaire Wang Jianlin, who was among the most acquisitive Chinese tycoons up until previous year.

Last month, Wanda acknowledged that China's banking regulator had ordered an inspection of potentially risky loans to it and other major Chinese companies that have invested heavily overseas. Tourism and entertainment had appeared to be the main parts of a pivot to more consumer-focused businesses by Wanda in recent years, exemplified by the multi-bilion dollar acquisitions of Hollywood movie studio Legendary Entertainment and move-theater chain AMC Entertainment. "It's unclear if the sale of their tourism projects is good for them, especially since those tourism culture projects are Wanda's flagship ones".

Wanda said Sunac will take over responsibility for the tourism projects' loans and financing, while Wanda will continue to design, build and manage the resorts under its own brand name.

In a brief joint statement, the two companies said Sunac would buy 76 hotels outright, without specifying which properties.

Sunac yesterday halted trading of its shares in Hong Kong pending an announcement of a "very substantial" acquisition, it said.

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