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In the largest China-Hollywood deal to date, conglomerate Dalian Wanda Group Co. has agreed to acquire production and finance company Legendary Entertainment for $3.5 billion in cash.

The deal significantly expands Wanda's presence in the global entertainment business, as it now owns one of the largest independent movie companies in Hollywood. It previously acquired AMC Entertainment Holdings Inc., the second-largest cinema chain in the U.S., and owns theaters and makes movies in China.

"Maybe in the future we will acquire a bigger group. It is possible because we want to have a bigger position in the global movie industry," Wanda chairman Wang Jianlin said at a news conference in Beijing Wednesday.

Though not a studio with distribution capabilities such as Time Warner Inc.'s Warner Bros., Legendary has co-financed dozens of movies with partners including "The Dark Knight," "Jurassic World" and "Straight Outta Compton." More recently it began producing its own films, with a mixed box office record. The past year has seen flops including "Seventh Son" and "Crimson Peak."

However, some of its films, including "Godzilla" and "Pacific Rim," have done particularly well in China and the company is focused more on such monster movies going forward. Legendary also has small, but growing, television and digital divisions.

Legendary is creating a series of films to follow up "Godzilla," as well as a big-screen adaptation of the videogame "Warcraft" and a Chinese co-production titled "The Great Wall," starring Matt Damon.

Working with Wanda, Legendary will likely produce more movies in China, and it will now have an ally getting its movies released in the country despite the government's quotas on imported motion pictures.

Mr. Wang said he intends to take Legendary and his company's other movie assets public, though those plans are preliminary at the moment.

In addition, Mr. Wang said the purchase is a play for intellectual property—not just for film, but also for Wanda's cultural business arm, which oversees theme parks.

Chinese companies have backed several new movie ventures in recent years, including projects started by former Warner Bros. film chief Jeff Robinov and former Walt Disney Co. studio chairman Dick Cook. But Chinese firms haven't previously acquired large entertainment companies such as Legendary.

Expanding the country's "soft power" through its cultural industries is a priority for China's central government.

Wanda previously talked to other Hollywood companies, including "Hunger Games" studio Lions Gate Entertainment Corp. By late last year it was talking to Legendary about buying a minority stake—talks that evolved to become a complete acquisition.

Among the Legendary investors being bought out are Japan's SoftBank Corp., which invested $250 million for a stake of close to 10% in 2014.

Legendary's chief executive Thomas Tull will remain in his job following the acquisition and will "participate in the success of the company with Wanda," according to an announcement.

Mr. Tull said many details of the partnership had yet to be worked out. "This has never happened," he said on a conference call. "There's no road map for this."

Write to Ben Fritz at ben.fritz@wsj.com and Laurie Burkitt at laurie.burkitt@wsj.com

(END) Dow Jones Newswires

January 12, 2016 00:25 ET (05:25 GMT)

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