China’s Focus Media Gets Offer to Go Private (FMCN, CG, AMCN, LAMR)

China’s largest digital display advertiser, Focus Media Holding Ltd. (NASDAQ: FMCN), announced today that it had received a preliminary offer from a group including the company’s chairman and CEO to take the company private for $5.40 a share, or $27.00 per American depositary share (ADS). The proposed transaction reflects a 16% premium to Focus Media’s closing price last Friday and a 34% premium to the volume-weighted 30-day average closing price.

The consortium group making the offer includes subsidiaries of China’s CITIC Capital Partners, the Carlyle Group LLC (NASDAQ: CG), and China Everbright Bank. The group intends to fund the acquisition with cash and debt, and a number of banks have indicated that they are “highly confident of their ability to fully underwrite the debt financing” for the deal.

Focus Media’s shares have been faltering since hitting a 52-week high in mid-March, down nearly 20% at the beginning of August. The company competes in China with AirMedia Group Inc. (NASDAQ: AMCN), and is about the same size as U.S. outdoor media firm Lamar Advertising Co. (NASDAQ: LAMR). Lamar said last week that it was considering a conversion to a REIT to take advantage of the tax benefits, an announcement which sent the shares to a 52-week high.

It’s fairly common for the top executives of Chinese companies to offer to buy up their struggling companies in a going-private deal. Shareholders are unlikely to get a better offer, so the offers often are on the low side. This is probably another one of those kinds of deals.

Focus Media is are up 10.1% at $25.75 this morning in a 52-week range of $8.79 to $32.93.

Paul Ausick