SINA & Focus Media Ad Combination Swap (SINA, FMCN)

SINA Corporation (NASDAQ: SINA) has agreed to buy Focus Media Holding Limited’s (NASDAQ: >FMCN) digital out-of-home advertising networks.  This will include a LCD display network, a poster frame network and its in-store network.  Focus Media will retain its Internet advertising division, the movie theater advertising network portion of its commercial location network, and certain traditional billboards.   

The terms of the deal are interesting for Focus Media shareholders.SINA will issue 47 million new shares to Focus Media and then Focus Media Holding will distributethe new SINA shares to its shareholders shortly after the closing.

The transaction has already been approved by the boards of directors ofFocus Media and of SINA and does not require shareholder approval.

SINA will acquire the assets under Focus Media’s LCD display network, poster frame network and
in-store network.

The related business of the acquired assets combined accounted forapproximately 52% of revenue and approximately 73% of gross profitsfor Focus Media for the nine months ended September 30.

This is essentially a $1 billion deal, although investors do not seem pleased.  SINA shares are down 8% at $26.90 in the initialreaction.  Shares of Focus Media are down 2% at $10.75.  Focus Media had already seen a substantial recovery over thelast week on the bet that a reorganization was coming.

Jon C. Ogg
December 22, 2008