Dalian Wanda Group Corporation Ltd. is looking to buy a majority stake in Lions Gate Entertainment Corporation, a Canadian-American film company. Wanda’s chair Wang Jianlin—the fourth-richest man in China—met with Lionsgate chair Mark Rachesky in October to discuss the acquisition, the LA Times reports.

Despite the meeting, Lionsgate isn’t currently looking to sell a majority stake in the company. Rachesky said he only wants to sell a part of his 37 percent stake, and only to a party that will pose a strategic benefit to Lionsgate. Wanda could still purchase a smaller stake and later build its way up to a majority share.

Wanda is not the only Chinese company interested in the studio. Alibaba—which signed a deal with Lionsgate in July to collaborate on a subscription streaming service in China—and investment group Fosun International Ltd. are both looking into purchasing the company.

Why Lionsgate? While Wanda has not ruled out the possibility of purchasing a larger studio, Lionsgate’s market value is less than $5 billion, and it’s also not a part of a bigger major media company, making it easier to acquire. In addition, as a successful, still relatively large studio, it has both the technical know-how and connections to western entertainment industry talent that Chinese companies want and need in order to expand into the global entertainment market.

The possible deal is being discussed against a background of recent high-profile Chinese interest in the American entertainment industry. Fosun and Hony Capital both invested in American studios this year, and technology company Tencent Holdings Ltd. recently signed a distribution deal with Time Warner Inc.’s HBO. Bloomberg reports that Lionsgate shares rose by 3 percent amid speculation over the deal, and they are up 10 percent so far this year.

The impetus for Wanda’s interest is the boom in China’s domestic entertainment industry, caused by an expanding middle class and money from investors shying away from other sectors of the economy, Wang says. Wanda’s chairman made his money in real estate, which is slowing even as China is building 10 movie theaters a day. China’s box office is expected to surpass the value of the US box office by 2019, the Los Angeles Times reports. Wang says this is why his company is turning from real estate and property development to entertainment.

Wang has big plans for Wanda’s future. Wanda already has 1,247 screens in 149 theaters across China, and bought AMC for $2.6 billion back in 2012, creating the largest cinema chain in the world. Wang has expressed his ambition to control 20 percent of the world cinema market by 2020. Wanda has also begun constructing an amusement park, set to be completed in 2017, that will include a movie museum and studio grounds to house 20 soundstages, Bloomberg reports.

(Photo by Gage Skidmore via Flickr)

Posted by Lauren Dodillet