PE firms bid for Chinese ad company
Source: Bloomberg News |
August 15, 2012, Wednesday
|
Print Edition
Print Edition
FOCUS Media Holding Ltd, a Chinese advertising company targeted by short seller Carson Block, has received an offer from private equity firms, including Carlyle Group LP, in what would be the country's largest leveraged buyout.
The bidders made a "non-binding" offer of US$27 for each American depositary share, the Shanghai-based company said in a statement. The offer is 15 percent more than Focus's Friday closing price and above the level when Block's Muddy Waters LLC began targeting it in November.
Some Chinese companies that were the subjects of research by short sellers rose in US trading on Monday after the bidders, who include Citic Capital Partners and Focus Media CEO Jiang Nanchun, made the proposal that values the company at US$3.5 billion. A successful deal would see the advertising group join Chinese companies such as Fushi Copperweld Inc and Winner Medical Group Inc in backing moves to go private after short sellers raised accounting and corporate governance concerns.
The offer "is another example of how Chinese are taking more and more of their companies private," said Sachin Shah, a New Jersey-based strategist at Tullett Prebon Plc.
"The US market isn't properly valuing them and doesn't know if the offer price is right, allowing the management of the companies to possibly win in getting the assets at lower valuations."
Fosun International Ltd, which owns a 17.2 percent stake in Focus Media, said the offer is an "attractive option." Fosun hasn't made a commitment on the deal and will monitor the situation, it said in an e-mailed statement.
The bidders made a "non-binding" offer of US$27 for each American depositary share, the Shanghai-based company said in a statement. The offer is 15 percent more than Focus's Friday closing price and above the level when Block's Muddy Waters LLC began targeting it in November.
Some Chinese companies that were the subjects of research by short sellers rose in US trading on Monday after the bidders, who include Citic Capital Partners and Focus Media CEO Jiang Nanchun, made the proposal that values the company at US$3.5 billion. A successful deal would see the advertising group join Chinese companies such as Fushi Copperweld Inc and Winner Medical Group Inc in backing moves to go private after short sellers raised accounting and corporate governance concerns.
The offer "is another example of how Chinese are taking more and more of their companies private," said Sachin Shah, a New Jersey-based strategist at Tullett Prebon Plc.
"The US market isn't properly valuing them and doesn't know if the offer price is right, allowing the management of the companies to possibly win in getting the assets at lower valuations."
Fosun International Ltd, which owns a 17.2 percent stake in Focus Media, said the offer is an "attractive option." Fosun hasn't made a commitment on the deal and will monitor the situation, it said in an e-mailed statement.
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