Focus Media Holding Ltd., a Chinese outdoor advertising firm that delisted in the United States because of attacks from short-seller Muddy Waters, is set to go public again via a reverse takeover in Shenzhen that values it at more than US$7 billion.
The planned backdoor listing represents a doubling in value for the company since it was taken private in 2013 for US$3.7 billion by a Carlyle Group-led consortium in China’s biggest-ever leveraged buyout, Reuters reported, citing regulatory filings.
It also sets a precedent for Chinese firms listed abroad but which are keen to come back home, attracted by a long and sharp rally for mainland stock markets that has seen them more than double in value over the past year, the news agency said.
The acquiring company, Jiangsu Hongda New Material Co. Ltd. (002211.CN), has approved a major asset restructuring that involves buying Focus Media through a mix of cash, new shares and an asset swap for 45.7 billion yuan (US$7.4 billion).
Reverse takeovers generally undergo less scrutiny than initial public offerings but the plan will require approval from the China Securities Regulatory Commission and other regulators.
Trade in shares of Jiangsu Hongda, which makes silicone rubber used in baby bottles and swim caps, has been halted since December, when it unveiled plans for a restructuring that did not mention Focus Media.
Focus Media, which had been listed on the Nasdaq, was one of the high-profile Chinese firms targeted by Muddy Waters which accused it of overstating the number of screens in its LCD advertising network by about 50 percent. Focus Media has denied the allegations.
It operates flat-panel display screens in commercial buildings and also has screens in elevators, supermarkets and convenience stores.
Other investors in the consortium that took Focus Media private included FountainVest Partners, CITIC Capital Partners, China Everbright and Fosun International Ltd. (00656.HK).
Hongda New Material said it will fund part of the acquisition through a private placement worth up to 5 billion yuan.
Huatai United Securities and Southwest Securities were hired as independent financial advisers for the deal.
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