DMG Entertainment, the Beijing-based company that co-produced Hollywood films including "Iron Man 3" and "Transcendence," is in the process of going public on the Shenzhen Stock Exchange.
The move will see DMG enter the exchange through a reverse takeover with meat-processing company Sichuan Gaojin Foods. The deal still needs regulatory approval.
According to DMG and Sichuan Gaojin, the deal values DMG at $970 million. That's three times the value of Gaojin at the end of 2013. After the transaction, the company's largest shareholder will be DMG Chairman Peter Xiao Wenge.
Documents filed by Sichuan Gaojin with the Shenzhen Exchange said DMG's revenue grew from about $181 million in 2011 to $270 million in 2012 and $271 million in 2013. Film and television revenue saw a large jump between 2012 and 2013, rising from $9.3 million to $48.2 million.
"Iron Man 3," released in 2013, grossed $121 million at the mainland box office.
Profit at DMG rose to $45.9 million in 2013, up from $25.3 million in 2011, Sichuan Gaojin's documentation indicated.
DMG began as an advertising and TV commercial production firm but has also invested in domestic film and TV production and distribution and has interests in music and other sectors. Shares of Sichuan Gaojin, which had been suspended for months, resumed trading April 8 and have nearly doubled in the last two and a half weeks.
Until recently, China had enacted a moratorium on initial public offerings, and a backlog of listings is now awaiting approval. Among the entertainment-related companies that recently announced plans for IPOs are Wanda Cinema Line, China's biggest movie theater chain, which plans to raise $321 million, and Shanghai Film Corp., a film producer, distributor and exhibitor that wants to raise $155 million.
Media firms remain a highly regulated, largely government-controlled sector in China, and a reverse takeover could allow DMG — which has several non-Chinese principals — to go public without drawing too much attention to itself. Chinese-language media carried reports of the reverse takeover earlier this month, but DMG had not made a statement until this week, when Variety first reported the news.
A number of Chinese companies — including restaurant chains, fireworks manufacturers, dairy firms and video game makers — have shown interest this year in acquiring media, TV and film production companies.
Restaurant chain Beijing Xiangeqing said in March that it would acquire 51% of China Film & Television Production Co. and 51% of Di Nu Film & Television. The same month, Panda Fireworks Group announced that it would spend $91 million to acquire Dongyang Huahai Shidai Pictures Media.