In one of the biggest Chinese technology deals of 2008, Chinese Internet portal Sina.com has entered into a definitive agreement worth about USD1 billion with Focus Media Holding Limited to acquire substantially all of the assets of Focus Media’s digital out-of-home advertising networks, including 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 transaction is intended to combine the forces of the two of the most powerful new media advertising platforms in China to provide more effective and integrated marketing solutions to our customers,” said Charles Chao, president and CEO of Sina Corporation, “We believe that this business combination will significantly extend our media reach and influence, reinforcing our position as a partner of choice in new-media advertising in China.”
The transaction has been approved by both boards of directors and is not subject to shareholder approval. The transaction is subject to customary closing conditions and certain regulatory approvals and is expected to be completed in the first half of 2009. Under the agreement, Sina will acquire the assets under Focus Media’s LCD display network, poster frame network and in-store network. The related business of the acquired assets combined accounted for approximately 52% of revenues and approximately 73% of gross profits for Focus Media for the nine months ended September 30, 2008. Sina will issue 47 million newly issued ordinary shares to Focus Media Holding as consideration for the acquired assets. Focus Media Holding will then distribute Sina shares to its shareholders shortly after the closing.