Alibaba Group Holding Limited has agreed to acquire a minority equity interest in Focus Media Information Technology Co., Ltd. (Focus Media) to jointly explore innovative digital marketing initiatives tied to Alibaba’s New Retail strategy.
Established in 2003 by Jason Nanchun Jiang (President of Focus Media)this Chinese digital outdoor company has created and pioneered the biggest lifestyle targeted interactive digital media network for China. Its business scope includes LCD display network, poster frame network, movie theatre network, and in-store digital signage network.
Focus Media medium-term goal is operating five million LCD terminals in 500 Chinese cities and reaching 500 million middle-class consumers.
The total share that Alibaba will hold in Focus Media including direct owned and indirect owned participations reaches the 31.33%.
The closing of all the transactions described below are still subject to customary conditions.
Synergies with Alimama
The Focus Media deal brings clear synergies with Alimama, Alibaba’s largest digital-marketing platform.
Alibaba is already using the data collected from its more than 500 million users adding analytics to help brands better understand and reach Chinese consumers.
The partnership with Focus Media puts in the hands of Alibaba new digital channels through which the brands selling on its e-commerce platforms can connect with the Chinese consumers and their rising purchasing power.
A buch of direct and indirect deals to reach the 31.33% stake
Alibaba will acquire a total of an approximately 6.62% equity interest of Focus Media for an aggregate purchase price of RMB9.63Bn ($1.43) through direct purchase of secondary shares and acquisition of certain of these shareholders’ offshore entities that hold Focus Media shares.
In addition, to better align Alibaba’s interest with that of the management team of Focus Media, Alibaba has agreed to acquire, through subscription for newly-issued shares, a 10% equity interest of an entity controlled by Mr. Jason Nanchun Jiang, founder and chairman of Focus Media, which holds 23.34% of the Focus Media shares, for a consideration of $511.1 million.
In conjunction with Alibaba’s investment, New Retail Strategic Opportunities Fund, L.P., a non-consolidated related party of Alibaba, the e-commerce multinational agreed to acquire an aditional 1.37% share in the capital equity of Focus Media.
Alibaba is also seeking to acquire up to another 5% of Focus Media’s equity interest in the next 12 months. Should the e-commerce giant carry out thi new purchase its interest in Focus Media would reach the 36.33%.
Image over the headline.- Digital screen belonging to Focus Media Business segment network located inside office buildings. © Focus Media.
