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July 17, 2009

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Talk of rejection for Sina's Focus deal

CHINESE Internet portal Sina Corp's application to buy the core assets of Focus Media is incomplete, China's commerce ministry said yesterday, amid speculation regulators may reject the deal.

The ministry said in a statement that it received the application from Sina, the country's leading Internet portal, in February. The proposal would see Sina effectively buying Focus, a leading outdoor advertising firm, in a deal valued at about US$1.37 billion in stock.

Sina and Focus provided supplementary information on four occasions after the initial filing, according to a ministry statement provided to Reuters. But the documents submitted failed to satisfy conditions set out in China's anti-monopoly act, the ministry said.

"Currently the ministry is conducting procedures in accordance with the law," the ministry said in the statement, without elaborating.

Since announcing the deal in December, which would be the largest to date for China's media sector, both firms have said the government has officially notified them on their application to merge.

The lengthy delays have led to rampant speculation that the deal was running into trouble with regulators, especially after Coca Cola's high-profile US$2.4 billion bid to buy leading Chinese juice maker Huiyuan failed in March on anti-monopoly concerns.

"We have not been formally notified by the Chinese Ministry of Commerce that they have officially accepted our application for the merger," said Jing Lu, a spokeswoman for Focus Media.

Both firms have told Chinese media recently that they have complied with the ministry's request for more information and are preparing additional documents.

But some analysts say they don't expect the deal to pass, given the prolonged delay.



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