Chinese conglomerate Recon Group has abandoned its $100 million bid to buy a majority stake in Avi Lerner’s Millennium Films, becoming the latest Middle Kingdom acquisition of a Hollywood firm that failed to get past China’s increasingly strict regulators.
On Wednesday evening, the company announced in a filing on the the Shenzhen stock exchange that the deal had failed to meet certain conditions by an Aug. 31 deadline to and Recon would therefore end the purchase process.
The deal, which would have given Recon subsidiary Wenyuan Cable Co. 51 percent of the studio behind “The Expendables,” was first announced in Feb., a time when an endless amount of Chinese companies seemed to be buying up Hollywood. AMC Theatres owner Wanda Group raised eyebrows with a $3.5 billion purchase of “Kong: Skull Island” production company Legendary Entertainment at the beginning of last year, opening the floodgates for a river of Chinese cash looking for Hollywood targets.
But the environment has changed significantly since the beginning of the year. Looking to keep hard cash in the country and avoid some of its most important companies overpaying for showbiz assets, the Chinese government began to seriously clamp down on cross-border entertainment acquisitions, as would-be megadeals like Wanda’s $1 billion purchase of Dick Clark Productions and copper company Anhui Xinke’s $350 million deal for an 80 percent stake in Voltage Pictures fell through.
Earlier this month, China’s regulators formalized its crackdown, ruling that entertainment, sports and hotels would be restricted, requiring Chinese buyers to prove to officials the deals were in the interest of both parties — and effectively dooming the types of acquisitions like Recon’s Millennium deal.