Focus Media receives $3.5b buyout offer from PE players
US-listed Focus Media has received a $3.5 billion offer from its chief executive and a group of private equity giants to take the company private. If the deal goes through, the leveraged buyout could be China's largest, and Focus Media could be the largest Chinese company to be delisted from a US stock exchange.
The bidders - CEO Jason Jiang, The Carlyle Group, FountainVest Partners, CITIC Capital Partners, CDH Investments and China Everbright - have made a non-binding offer of $27 for each American depositary share, representing a premium of 16% on the company's closing price on Friday.
The news comes in the face of the poor market performance of many US-listed shares of Chinese companies. Focus Media's share price peaked at close to $65 in late 2007 but subsequently entered a drastic decline to around $6 in 2008. Focus Media's American depositary shares jumped 8.9% to $25.45 on news of the buyout offer.
The consortium has been in discussions with Citigroup, Credit Suisse and DBS Bank about financing the buyout. A statement from the Shanghai-based advertising company on Monday said that these banks already provided Carlyle, FountainVest and CITIC Capital Partners with a ‘highly confident' letter on Saturday, indicating that they believe they can fully underwrite the debt financing for the acquisition.
Founded in 2003, Focus Media operates an advertising network in various Chinese urban locations. The company uses audiovisual television displays that are placed primarily in high-traffic areas of commercial office buildings such as in lobbies and near elevators, as well as in large retail chain stores and other venues.
In 2011, total net revenue of Focus Media was $792.6 million, an increase of 54% from $516.3 million in 2010, with a net income of $200.9 million, compared to $184.3 million last year.
The company's investors include Fosun International, which holds 17.2%, as well as Wellington Management, Eastspring Investments and Capital World Investors, which own 4.6%, 4.4% and 4.3% respectively.
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