Private equity funds sponsor a possible MBO of China’s Focus Media

Chinese interactive digital media firm Focus Media Holding Limited (NASDAQ:FMCN) said its board is reviewing a going-private offer received from a consortium comprising its chairman and CEO Jason Nanchun Jiang and a group of private equity funds including US Carlyle Group.

The consortium, which also comprises Chinese private equity investors FountainVest Partners, CITIC Capital Partners, CDH Investments and China Everbright Limited (HKG:0165), has proposed to buy Focus Media at USD27.00 (EUR21.85) per American depositary share (ADS), or USD5.40 per ordinary share, the target company said.

In a letter sent to Focus Media’s board, the consortium said they would form a new company to carry out the acquisition and had been in touch with some banks over securing debt financing, which they would use to cover the price along with equity funding.

The proposal offers a 16% premium to the target’s share price at closing on 10 August, the buyers said, adding they had hired advisors and could complete due diligence in a timely manner while negotiating a definitive agreement.

Focus Media has put together a committee of independent directors to evaluate the non-binding bid, with Simpson Thacher & Bartlett LLP acting as advisor. So far the committee has made no decision regarding the proposal and there is no certainty that an agreement would be reached, Focus Media said.

According to Bloomberg data, the transaction values the Chinese target at some USD3.5bn.

The buying consortium has retained the advisory services of Fried, Frank, Harris, Shriver & Jacobson LLP, Sullivan & Cromwell LLP, Skadden, Arps, Slate, Meagher & Flom LLP, Zhong Lun Law Firm, Conyers, Dill & Pearman and Ernst & Young LLP.