Focus Media’s Back Door Listing Gets Government Green Light

Chinese digital media and display advertising firm Focus Media Holdings Limited’s planned reverse merger with Shenzhen-listed computers and accessories maker Hedy Holding Co., Ltd. has obtained approval from local commerce bureaus, say a securities filing.

The deal, which values Focus Media at RMB45.7 billion (US$7.2 billion), still needs to be approved by the Chinese securities regulator.

Focus Media initially announced a back door listing plan in May with rubber producer Hongda New Material, but scrapped the deal in August after Hongda’s chairmen was investigated for securities law violations.

Focus Media was de-listed from the NASDAQ after a go-private deal led by company founder and a group of private equity firms in 2013. Focus Media was valued at US$3.7 billion in that transaction.

Focus Media’s founder, Jason Nanchun Jiang, holds 26.73% of the company currently. FountainVest Partners, Fosun International Limited, CITIC Capital China Partners each holds 19.71%, 17.43%, 9.85%, respectively.

The Carlyle Group and China Everbright Structured Investment Holdings also participated in the privatization deal, but it’s unclear how much a stake they own.

In June, Shenzhen-based Chinese venture firm Fortune Capital reportedly invested RMB300 million (US$48 million) in Focus Media Holding Limited for an undisclosed stake.

Founded in 2003, Focus Media operates advertising screens in office buildings and other public venues in over 100 cities in China. It recorded net profit of RMB2.5 billion in 2014, up from RMB1.3 billion in 2013.

(Update on December 28, 2015: The transaction was completed today as per a regulatory filing (text in Chinese) by Hedy Holding.)

Caishen.Co - Primary Data for China Secondary Investment and Stock Markets
Caishen.Co - Primary Data for China Secondary Investment and Stock Markets