Tuesday, December 11, 2007

Focus Media buys CGEN for $164M + maybe another $182M!

Yikes, there's a lot of money changing hands in the Chinese digital signage market these days. Focus has thrown down the gauntlet: they want to make sure that they stay the biggest digital signage company in the land, and to do so they've apparently agreed to buy another one of the behemoths in the industry, CGEN. The terms, according to this press release, are a bit complex:
Under the agreement, Focus Media will acquire 100% of the equity of CGEN for US$168.4 million in cash, and an additional payment of up to US$181.6 million, part in cash and part in Focus Media ordinary shares (valued at US$53.42 per ADS, each of which represents 5 Focus Media ordinary shares), contingent upon CGEN meeting certain earnings targets during the twenty four month period from the closing of the transaction. The transaction values CGEN at 17.5 times its expected 2008 US GAAP earnings with certain adjustments.
Focus's um... focus was originally on placing screens in the lobbies of big office buildings in major metropolitan areas, but since their IPO they've expanded into other digital out-of-home venues as well as mobile advertising through an acquisition earlier this year. Oddly, just last year CGEN was suing Focus for using unfair practices to lure away a major client. Guess that's all water under the bridge now :)

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