Carlyle-Led Group Close to Buyout of China's Focus Media
NEW YORK ( TheDeal) -- The $3.8 billion buyout of China's digital advertiser Focus Media Holding Ltd. (FMCN) by management and a Carlyle Group-led private equity consortium should close next week following shareholder approval.
Shareholders will vote on the buyout on April 29. The deal has support from chairman and CEO Jason Nanchun Jiang, who holds roughly 36% of the digital media company. Institutional Shareholder Services Inc. and Glass Lewis & Co. LLC have recommended that shareholders favor the deal.
The buyout does have a high shareholder approval hurdle, requiring that 47% of the non-rolling shares support the transaction, according to the deal proxy.
Focus Media added 0.2% to $26.02.Management, with backing from Carlyle, FountainVest China Growth Capital Fund LP, Citic Capital Partners and China Everbright Structured Investment Holdings Ltd., are taking Focus private for $27.50 for each American Depositary Share, less a 5 cent fee for terminating the ADS. The spread on the transaction Tuesday was 56 cents, or 2%. Assuming the deal closes May 20, that represents an annualized return of 28%. The merger agreement allows the buyer group 15 business days from meeting the conditions of the deal to close, or about the May 20 date. The deal has an initial termination date of June 19, including its debt commitments, which under certain circumstances can be extended. But Focus Media expects the transaction to close shortly following the shareholder vote. Because financing for the deal has already closed, the buyers are likely not to need the full 15 business-day allotment. Focus Media negotiated against a debt marketing provision during deal talks. A May 2 close translated to an 85% annualized return. The chief risk remains an informal inquiry by the Securities and Exchange Commission regarding the company's financial filings and transactions since March 2012. Carlyle had full knowledge of the SEC investigation during due diligence. The SEC has not indicated it has found any wrongdoing, nor is it bound in any way by the deal timetable to complete its inquiry. The merger agreement is conditioned on there being no formal government action taken against the company or its officers.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV