| HONG KONG
HONG KONG (Reuters Breakingviews) - Beijing seems to have put China's richest man on a leash. Hollywood website the Wrap says Wang Jianlin's $1 billion bid for Dick Clark Productions, via Wang's Dalian Wanda Group, has been killed by Chinese officials worried about the price tag and capital outflows. If true, this bodes ill for other Chinese firms on the prowl.
The timing of Wanda's bid for the producer of the Golden Globe Awards and the Miss America pageant was awkward, coming amid congressional concern over rising Chinese influence over Hollywood. China hawks warned Wanda's ownership of theatre-operator AMC Entertainment and studio Legendary Entertainment could serve as covert channels for communist propaganda.
At this stage, it is impossible to divine exactly what is happening. This could be cover for Wanda itself getting cold feet, for example. More likely, though, is that Chinese regulators concluded another high-profile acquisition could do more harm than good to the government's soft-power project.
Wang insists he's strictly business and overseas investments are all about profit. But in December he said the jobs of his 20,000-plus U.S. employees could be at risk if President Donald Trump alienated his government, following Trump's controversial remarks over Taiwan made prior to taking office.
The profitability question may also concern Chinese regulators, worried that Chinese firms desperate to move money abroad are overpaying to do so. Wang does seem to be splashing cash around. In the case of Dick Clark the $1 billion price tag represents a big increase from the $380 million Guggenheim Partners paid in 2012. Wang forked out $3.5 billion for Legendary in 2016 even though it lost $556 million the previous year.
Officials in Beijing are hardly best-qualified to decide whether a given deal is too expensive or not, but it doesn't stop them from sticking their oar in.
For foreigners courting Chinese acquirers, the message is clear. China is already scrutinising large foreign deals, especially ones with limited strategic logic. If Wanda cannot take Beijing's regulatory approval for granted, nobody else can. Expect break fees and demands for upfront payments to increase accordingly.