Sina Corp. and Focus Media dump merger proposal
Posted by Simon Day on September 29, 2009 at 1:55 AM
Chinese online media company Sina Corp. has dropped its planned US$1.66 billion merger with Focus Media Holding Ltd. afflicted by a laborious regulatory approval process, the Wall Street Journal reported Tuesday.
Alternatively, internal investment will occur, with Sina's chief executive leading a $180 million purchase of a 10 percent equity stake in the company.
Alternatively, internal investment will occur, with Sina's chief executive leading a $180 million purchase of a 10 percent equity stake in the company.
Sina, who owns China's largest Internet portal, had planned to acquire Focus Media's advertising assets but the expansion into offline advertising was seen as risky.
The deal would have seen Sina exchange stock for Focus Media's bulletin boards and flat panel display products.
However the deal expired on Wednesday after it failed to receive approval from the Chinese Ministry of Commerce, which has pushed back its review of the deal several times since the purchase of Focus Media's core assets was announced in December 2008.
Controversy also surrounds Sina's alternate plan to issue new shares to management and the potential conflict with existing shareholders. "There is a very bad corporate governance issue here, because they are going to issue 10 percent new shares to the management at a 10 percent discount, I don't know how they can get around with this," said Elinor Leung, a senior analyst with CLSA Asia Pacific markets told Reuters today. "When you issue new shares you should issue it to everybody."
However the deal expired on Wednesday after it failed to receive approval from the Chinese Ministry of Commerce, which has pushed back its review of the deal several times since the purchase of Focus Media's core assets was announced in December 2008.
Controversy also surrounds Sina's alternate plan to issue new shares to management and the potential conflict with existing shareholders. "There is a very bad corporate governance issue here, because they are going to issue 10 percent new shares to the management at a 10 percent discount, I don't know how they can get around with this," said Elinor Leung, a senior analyst with CLSA Asia Pacific markets told Reuters today. "When you issue new shares you should issue it to everybody."
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