Focus Media deal with Internet portal giant scrapped
September 28, 2009 by Dave Haynes
From the New York Times business section today …
The Chinese Internet portal Sina.com said Monday that it had scrapped plans to pay $1 billion to acquire a large piece of Focus Media, one of the biggest Chinese advertising and digital media companies.
The companies, which agreed to a deal last December, did not explain the decision, but they suggested that the Chinese government’s delay in approving the deal was part of the reason. The two companies said in a joint statement that they would not seek to extend the Sept. 30 deadline for the deal.
“Although we will not move forward with the merger, we will continue further and more intensive strategic cooperation with Sina in the long run,” Jason Jiang, the founder and chairman of Focus Media, said in the statement.
A person close to the deal said Monday that the government had not responded to the repeated requests for approval and that the two companies were suffering from “uncertainty” surrounding the proposed deal.
The breakup should not come as a surprise to investors in the two Nasdaq-listed companies because for weeks there had been rumors and analyst reports suggesting that the deal may not be completed.
When the deal was first announced, some analysts had said that Sina had agreed to pay too much for Focus Media, whose stock had already slid substantially because of sharp declines in advertising spending. That, some experts suggested, may have eventually soured Sina on the deal.