Wanda Chairman Wang Jianlin Illustration: Jason Ralsh

Chinese conglomerate Dalian Wanda Group on Tuesday announced a $3.5 billion deal to acquire Legendary Entertainment, one of Hollywood's biggest film studios, in a push to expand its foothold in the world film industry.

As the biggest-ever overseas acquisition by Wanda, the agreement will allow the group to connect its cinema chains with Legendary, the film production company that has produced blockbuster hits including Pacific Rim, Jurassic World, Man of Steel and Inception.

Wanda's foray into the global film industry began in 2012 when it bought AMC Entertainment Holdings Inc, the second-largest cinema chain in the US, for $2.6 billion. The group also runs China's biggest cinema chain, Wanda Cinema Line Corp, and makes films in the country.

At a news conference on Tuesday in Beijing, Wanda Chairman Wang Jianlin said that he planned to take Legendary and his company's other film production assets public.

"The purchase of Legendary will make Wanda a film production company with the largest revenue in the world, especially at a time when it has a tremendous clout in the Chinese and American markets, the two most important film markets in the world…Wanda's complete industry chain embodying film production, cinema lines and distribution channels will enhance its core competitiveness and voice in the world film industry," said Wang, adding that the acquisition will facilitate Legendary to gain more market share in China which imposes strict import quota restrictions on foreign films.

Strategic significance

The decision to acquire Legendary was made out of the intellectual property consideration as the US film studio owns thousands of intellectual property rights, which would serve as the impetus to promote the development of tourism and children's entertainment industries, the two important derivative industries of the film sector.

"Many people think that Wanda is buying Legendary for films, but we have a long-term view…The diversification of the film products is a major consideration behind the decision to buy Legendary," said Wang, whose personal wealth is estimated by Forbes to be about $27 billion.

The deal also gives Wanda a bigger say in the global film industry, which is currently dominated by several US film production giants. "The film market is global, and we must add our voice to the global film industry…It is possible that in the near future we will buy a certain big (foreign) entertainment firm and even an entertainment group," said Wang.

On the domestic front, Wanda inaugurated the construction of China's biggest film industrial park valued at 50 billion yuan in the eastern Chinese city of Qingdao, a move that can be seen as Wang's ambition of creating the Chinese version of Hollywood. The film industrial park is expected to complete construction by June 2017. Wanda also signed preliminary agreements with a number of international film production giants and artist brokerage agencies in order to fulfill the goal of having about 30 foreign films shot in China annually and inviting about 30 international A-listers to take part in the Qingdao International Film Festival every year.

With Wanda increasingly moving away from its original real estate business, the group is speeding up its drive to diversify its business by investing in the cultural sector. According to an operation report released on January 10, Wanda's cultural unit earned 51.28 billion yuan in revenues in 2015, an increase of 45.7 percent from a year earlier.

Statistics show that from 2010 to 2014 China saw an annual growth of 30 percent in box office revenues. It is estimated that the revenues from box office will reach $11.7 billion in 2016.