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Korea M&A Corporation
Sina to expand beyond Web with ad acquisition 본문
Sina Corp., a Chinese-language Web portal operator, is venturing outside the Internet to scoop up valuable advertising real estate in office buildings, malls and airports with its $1 billion-plus acquisition of a big chunk of Focus Media Holding Ltd.'s business.
Shares of both companies dived on fears that Sina is piling too much on top of its core business, and that Focus Media
The so-called "out-of-home" advertising networks Sina is buying include banks of television screens inside retail stores and office-building lobbies, and poster frames inside elevators. Advertisers buy space on the screens, or pay for permission to show their posters inside the poster frames. The deal represents a departure for Sina from the Web and its zeal to expand the kind of advertising it can offer customers.
The businesses being gobbled up by Sina make up more than half of Focus Media's revenue and nearly three-quarters of its profit. Among the businesses Focus Media will keep are its Internet advertising division, its movie-theater advertising network and some billboards.
The Shanghai-based companies, both traded in the U.S. on the Nasdaq stock market, announced the deal Monday. It calls for Sina, which is one of China's most recognized Internet brands and counts 280 million registered users, to pay for the acquisition with 47 million newly issued shares.
Before the deal was announced, the purchase price was about $1.4 billion, based on Sina's shares closing price of $29.24 on Friday.
On Monday, Sina shares fell $4.99, or 17 percent, to close at $24.25, giving the acquisition a roughly $1.1 billion price tag.
Focus Media shares fell $1.78, or 16 percent, to $9.20. Focus Media's stock price has lost more than 80 percent of its value over the past year. The stock hit its 52-week high of $59.37 on Jan. 3 and has been sliding steadily on fears about the company's viability.
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