Internet Portal in China
Sina Corporation of China is one of the largest Internet portals, said Monday it will acquire a large piece of Focus Media, one of the leading advertising and digital media companies in China, for approximately $ 1 billion in stock .
Business, which was announced late Monday in Shanghai, push Sina, which controls Sina.com, business and outdoors-shop for advertising on the liquid-crystal display screens, a huge diversification that has evolved as a kind of Chinese version of Yahoo, with news, blogs and online entertainment.
It also breaks for business or substantially alter Focus Media, a company based in Shanghai, that just over a year ago was one of China high-flying advertising companies, then valued at more than $ 7 billion euro after a successful listing on Nasdaq a few years earlier.
Both companies are now struggle to deal with fierce competition from China and an advertising slowdown that is expected to accelerate further in 2009.
Shares of the two companies, both of which trade on Nasdaq, fell sharply on the news Monday, it seems that worries over Sina was paid a high price for the assets that Focus Media was going to focus on change because of the sale.
Shares of Sina, were 17 percent down to $ 24.25, months later. And shares of Focus Media, which has fallen from around 60 U.S. dollars a year ago were 16 percent lower in late Monday trading at $ 9.20.
The companies said that the Boards of both companies have already approved the sale of assets and that it was not necessary vote of shareholders. Sina will issue approximately 47 million shares to shareholders of Focus Media to acquire goods.
Depending on the business, Sina is expected to get most of the holdings basic Focus media, including out-of-home advertising network, to LCD network and in-store network, which together would amount to more than 100,000 advertising screens in the country.
These assets represented about 52 percent of Focus Media revenue and 73 percent of profits through the first nine months of this year, the company said.
Focus Media, which is expected to have about $ 800 million in revenues this year, said it would maintain its rapid growth of online advertising assets, the movie its advertising network, its location and commercial networks traditional billboard business .
Sina, whose revenues are estimated to be close to $ 360 million this year, called the deal a merger of large properties.
“The transaction is intended to combine the forces of the two most powerful new-media advertising platforms in China,” Charles Chao, Sina of CEO, said in a statement.
Administrative Sina from Focus Media and are familiar with each other. Since 2005, Mr. Chao of Sina-served on the board of Focus Media, along with the company’s chairman and founder, Jason Jiang.
While Sina.com compete fiercely against other strong Chinese Internet companies such as Baidu, Sohu and Tencent, analysts have considered Focus Media an innovative company that has grown rapidly, mainly by acquiring competitors and monitor the implementation of the shops, residential buildings and even on the busy commercial street in China, in some larger cities, including Shanghai.
Recycling monitors short television advertising spots produced by a wide variety of brands, including global companies like Nike and Apple.
Focus Media was founded in Shanghai, Mr. Jiang, who was listed by Forbes for many years as one of China’s wealthiest entrepreneurs.
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