Universal Pictures and Chinese multimedia company Perfect World Pictures have entered into a multiyear agreement that would raise some $500 million in equity and debt to finance films across the entire Universal slate.
The partnership will last five years or cover the co-financing of 50 features, making the Chinese video game and TV production company a major investor in one of Hollywood's hottest studios. Thanks to three hits (Jurassic World, Furious 7 and Minions) that made more than $1 billion at the box office, Universal had its most profitable year ever in 2015.
Financial terms were not disclosed, but sources close to the deal told The Hollywood Reporter in January that Perfect World would be making an investment of $250 million in equity and plans to raise between $200-$250 million in debt. Perfect World is understood to be getting a 25 percent share of most, but not all, of the films released by Universal. Specific film titles included in the deal will be announced at a later date, the partners said Wednesday in a statement.
The agreement will not alter Legendary Entertainment's financing of select Universal titles, the two companies added. In another instance of China's growing market sway in Hollywood, Legendary was acquired by Chinese conglomerate Dalian Wanda Group for $3.5 billion in December.
"We are delighted to be partnering with Perfect World and appreciate the confidence it has in our film slates going forward after a record-breaking 2015,” said Jeff Shell, chairman of Universal Filmed Entertainment Group. “With Perfect World’s history of success in the Chinese market, we look forward to exploring other opportunities to work together.”
Added Michael Chi, chairman of Perfect World: “Building out our film business and expanding into international markets are two of the most important initiatives for Perfect World. Universal has had a stellar last few years, and with a slate that boasts many titles that we know will thrive in the marketplace, we are confident our partnership with them is a solid step in the right direction. Our partnership with Universal is not just about making movies together, but also about the opportunities that exist in the synergy across our multiple business lines to maximize strategic value for all involved.”
Although it's still a relatively new name to Hollywood, Perfect World has been active in film distribution, as well as Chinese TV production. For example, it was the Chinese co-distributor on Lionsgate's Divergent, Insurgent and Ender’s Game, as well as Universal's Rush. It also served as a producer-distributor on romantic comedy Sophie’s Revenge (2009), starring Zhang Ziyi and Fan Bingbing. Perfect World Pictures currently has a market capitalization of 12.5 billion Chinese yuan ($1.9 billion).
Perfect World was represented by Manatt, Phelps & Phillips, LLP. Universal Pictures was advised on the transaction by The Raine Group and represented by Gibson, Dunn & Crutcher LLP.