Focus Media Holding Ltd., China’s third-largest advertising company by ad revenue, announced that it has agreed to buy leading Chinese online advertising firm Allyes Information Technology Co. Ltd. for as much as $300 million, assuming profit targets are met. Shanghai-based Focus Media that runs a network of thousands of flat-screen TVs that display ads at different public places. The buyout would involve paying $3000 million in cash and stocks.
Under arrangements of the transaction, which is expected to conclude in March, Focus Media will pay $70 million in cash and $155 million in stock. Allyes also would receive an additional payment of up to $75 million in stock, under the condition that if it meets certain earnings targets during the 12 months from April to March 2008.
The takeover would provide Focus Media a new channel and targets China’s high-end urban consumers. At present, Focus Media does not have presence in TV and Internet advertising. With this acquisition company hopes to expand different forms of advertising platforms.
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