Home / World Business
Wed, Dec 24, 2008 - Page 10 News List

Sina.com buys ad firm for US$1bn

AP , BEIJING

Sina Corp (新浪), a major Chinese Web portal, is venturing outside the Internet with the acquisition of most of a leading advertising firm, Focus Media, for more than US$1 billion.

The deal announced late on Monday calls for Sina to acquire most of Focus Media, which has advertising space in office buildings, malls and airports. Its network includes banks of TV screens in office building lobbies and poster frames in elevators.

The deal is a departure from Sina’s online business, which has 280 million registered users, in an effort to expand its advertising business.

“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,” CEO Charles Chao (趙廣民) said in a statement.

The “out-of-home” networks Sina is acquiring allow advertisers to buy time on TV monitors in public places or to put their posters in frames inside elevators.

The businesses being acquired by Sina make up more than half of Focus Media’s revenue and nearly three-quarters of its profit.

Focus Media is keeping an Internet advertising division, a movie-theater advertising network and some billboards.

The Shanghai-based companies are both traded in the US on the NASDAQ stock market.

The deal calls for Sina to pay for the acquisition with 47 million newly issued shares. Before the deal was announced, the purchase price was about US$1.4 billion, based on Sina’s shares closing price of US$29.24 on Friday.

Shares of both companies dived on fears that Sina is piling too much on top of its core business, and that Focus Media is hacking off too much in an attempt to reverse a steep stock-price slide.

On Monday, Sina shares fell US$4.99, or 17 percent, to close at US$24.25, giving the acquisition a roughly US$1.1 billion price tag.

Focus Media shares fell US$1.78, or 16 percent, to US$9.20.

This story has been viewed 1282 times.
TOP top