DMG Entertainment, the Chinese film and TV company that helped make “Iron Man 3,” is seeking acquisitions and co-production deals in Hollywood as part of an expansion that includes a share listing in its home country.
"There are some major acquisitions that we will be announcing that are in the works,” Dan Mintz, the New York-born chief executive officer of DMG Entertainment, said in an interview, without being more specific.
The Beijing-based production company is working on U.S. purchases totaling more than $100 million, according to a person with knowledge of the situation who asked not to be named because the targets haven’t been identified publicly.
DMG Entertainment is looking to build its U.S. presence after scoring a coup by co-producing last year’s “Iron Man 3” with Walt Disney Co. (DIS)’s Marvel. The company wants to be more than a facilitator for U.S. companies in China, Mintz said.
"We are talking not only about building relationships with Hollywood studios but also pursuing acquisitions that will cover the gamut of the entertainment and media landscape,” Mintz said.
DMG Entertainment has held talks with most of the major studios about long-term strategic and financial partnerships, Mintz said, without identifying any.
As it looks to expand, the company is considering investing in a slate of films with a U.S. studio, people familiar with the situation said. The company has met with Sony Pictures officials, said the people, who asked not to be named because the discussions are private.
Studio Partnerships
"Iron Man 3” grossed $1.22 billion globally, to rank sixth on the all-time list, and was the No. 1 imported film in China in 2013. A specially edited version highlighted local talent and added footage from China to meet local tastes and satisfy censors.
This year, DMG co-produced “Transcendence,” a Warner Bros. film featuring Johnny Depp. The picture grossed almost as much in China as it did domestically. The company is also co-producing a remake of the surfer crime drama “Point Break” with the Time Warner Inc. (TWX) film unit, due for release in 2015. In 2012, DMG co-produced “Looper,” distributed by Sony in the U.S.
DMG Entertainment’s parent company, DMG Holdings, plans to list its shares later this year. The company will do so through a merger with Sichuan Gaojin Foods, a pork and meat processor, which is already publicly traded in Shenzhen.
Public Listing
At the end of 2013, China lifted a 14-month ban on initial public offerings amid a crackdown on fraud and misconduct. That has resulted in a backlog of IPO applications.
Gaojin will issue stock and buy the larger DMG Holdings in a deal that will values the company at RMB6.01 billion ($978 million). Following the share issue, Peter Xiao Wenge, DMG Holdings’ chairman and biggest shareholder, will become the largest individual shareholder of the listed company, according to regulatory filings.
"We are interested in films that will play well globally, and our role isn’t just to distribute them in China,” Mintz said. “We perform at the highest level in all filmmaking aspects – finance, development, production, marketing, and distribution.”
Hollywood studios face a challenge entering the Chinese film market, which grew 27 percent last year in box office sales and ranks as the world’s second-largest behind the U.S.
China restricts the number of international films distributed there and limits the producer’s share of box-office receipts to 25 percent. Studios co-producing a film with a Chinese company can avoid such restrictions.