PE-backed Focus Media finds new shell for backdoor listing

This comes after the chairman of Hongda New Material, Focus Media's initial target shell company, resigned from the firm in response to a probe by authorities. Prior to that, Hongda said it would acquire a 100% stake in Focus Media in a deal worth RMB45.7 billion ($7.37 billion). That reverse merger plan has now been terminated.

At the same time, Hedy said in a regulatory filing that it will acquire Focus Media for the same price through a combination of an asset exchange, a share issue and cash.

Hedy will exchange assets worth RMB880 million with Focus Media. It will also pay RMB4.93 billion in cash to Focus Media China Holdings (FMCH), an offshore shareholding entity. Meanwhile, the listed company will issue 3.8 billion shares at RMB10.46 apiece in exchange for Focus Media shares held by other stakeholders excluding FMCH, for a total consideration of RMB39.7 billion.

Hedy will finance the deal through a RMB5 billion private placement, with an issue price of no less than RMB11.38 per share.

An investment entity - Media Management Hong Kong - will become the controlling shareholder once the company re-lists. Jason Jiang, Focus Media's CEO, is the ultimate controller of this entity. The plan still requires approval from the China Securities Regulatory Commission.

Three months ago, a group of Focus Media's offshore shareholders, including The Carlyle Group, FountainVest Partners, Fosun International, CITIC Capital Partners, China Everbright and Primavera Capital, sold part of their stake to 36 domestic institutional investors in a transaction that valued the business at RMB45 billion.

Shenzhen-based Fortune Capital invested RMB300 million ($48 million) in Focus Media after the company announced its reverse merger plan with Hongda New Material.

At present, CITIC holds a 8.77% stake in the business, while Carlyle and FountainVest have 7.54% each. Fosun and China Everbright own 7.77% and 1.29%, respectively. Primavera has a 0.65% interest. Jason Jiang, Focus Media's CEO, will be the controlling shareholder once the company re-lists.

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 2014, Focus Media posted revenue of RMB7.5 billion, an increase of 12% from RMB6.7 billion from 2013, while net income came to RMB2.4 billion, compared to RMB2 billion in 2013.

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• Topics
• Greater China
• Exits
• Media
• China
• Exit
• Media
• The Carlyle Group
• Fountainvest Partners
• Fosun Group
• CITIC Capital
• China Everbright