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Sina to buy assets from Focus Media

(chinadaily.com.cn)
Updated: 2008-12-22 22:37

Chinese Internet portal Sina Corp on Monday said it would acquire some of the out-of-home advertising network assets of outdoor advertising company Focus Media.

The two companies, in a statement, said the assets to be acquired include Focus Media's LCD display network, poster frame network and in-store network.

Focus Media will retain its Internet advertising division, the movie theater advertising network portion of its commercial location network and certain traditional billboards.

The value of the deal was not disclosed. An earlier Bloomberg News report said it would be worth about $1 billion.

Sina said it will issue 47 million new shares to Focus Media to fund the deal, which, calculated by its closing price of $29.24 on December 19, would worth $1.37 billion. 

The related business of the acquired assets combined accounted for 52 percent of revenues and 73 percent of gross profits for Focus Media for the first nine months ended September 30, 2008, Sina and Focus Media said in the statement.

Focus Media, which sells advertising in elevators and office buildings, has been a runaway success story in China and made its founder Jason Jiang one of the richest in the country.

However, competition has been intensifying with many companies following its model. Focus Media was one of the worst-performing Chinese Internet companies this year and its shares have fallen nearly 80 percent on the NASDAQ.

Before the announcement of the deal, there have been speculations that Google would buy Focus Media's online-advertising unit for about $1.4 billion.