Merger

Focus Media enters into definitive merger agreement for going private transaction

Focus Media has entered into a definitive agreement and plan of merger with Giovanna Parent Limited and Giovanna Acquisition Limited, by which Parent will acquire Focus Media for USD5.50 per ordinary share of the company or USD27.50 per American depositary share, each representing five shares. 

This amount represents a premium of 17.6 per cent over the company's closing price of USD23.38 per ADS on 10 August 2012, the last trading day prior to 13 August, the date that the company announced it had received a "going-private" proposal, and a premium of 36.6 per cent and 33.9 per cent to the volume-weighted average closing price of the company's ADSs during the 30 and 60 trading days prior to 13 August, 2012, respectively.

The transaction values Focus Media's equity at approximately USD3.7bn, on a fully diluted basis.

Immediately after the completion of the transaction, Parent will be beneficially owned by Jason Nanchun Jiang, the chairman and chief executive officer of the company; affiliates of and funds managed by Giovanna Investment Holdings Limited, an entity owned and controlled by Carlyle Asia Partners III; Gio2 Holdings Ltd., an entity owned and controlled by FountainVest China Growth Capital Fund, FountainVest China Growth Capital Fund II,  their respective parallel funds and affiliates; Power Star Holdings Limited, an entity owned and controlled by CITIC Capital China Partners II; and State Success Limited, an entity owned and controlled by affiliates of China Everbright Structured Investment Holdings Limited.

In addition, Fosun International and/or its affiliates will become a beneficial owner of Parent after the transaction is completed. The chairman and Fosun, collectively, currently beneficially own, in the aggregate, approximately 35.5 per cent of the outstanding shares (excluding outstanding options and restricted share units of the company).

Subject to the terms and conditions of the merger agreement, at the effective time of the merger, merger sub will merge with and into the company, with the company continuing as the surviving corporation and a wholly-owned subsidiary of Parent.

Pursuant to the merger agreement, each share issued and outstanding immediately prior to the effective time will be cancelled and cease to exist in exchange for the right to receive USD5.50 in cash without interest and net of any applicable withholding taxes, and each ADS issued and outstanding immediately prior to the effective time will represent the right to surrender the ADS in exchange for USD27.50 in cash without interest and net of applicable withholding taxes, other than (i) a portion of the shares beneficially owned by the chairman and Fosun immediately prior to the effective time, which will be rolled over in the transaction, and (ii) shares owned by shareholders who shall have validly exercised and not effectively withdrawn or lost their rights to dissent from the transaction under the Cayman Companies Law, which shares will be cancelled at the effective time for the right to payment of the appraised value of such shares in accordance with the Cayman Companies Law.

Shares owned by the company or its subsidiaries and shares reserved (but not yet allocated) by the company for settlement upon exercise of any share incentive awards issued under the company's employee share incentive plans will all be cancelled for no consideration at the effective time.

The company's board of directors, acting upon the unanimous recommendation of an independent committee of the board of directors, approved the merger agreement and the transaction and resolved to recommend that the company's shareholders vote to authorise and approve the merger agreement and the transaction. The independent committee negotiated the terms of the merger agreement with the assistance of its financial and legal advisors.

Under the terms of the merger agreement, the company is not permitted to pay any dividends or repurchase any of its shares pending consummation of the transaction. As a result, the company's board of directors has suspended the company's previously announced share repurchase programme and dividend policy.

The transaction, which is currently expected to close during the second quarter of 2013, is subject to various closing conditions, including a condition that the merger agreement be authorised and approved by an affirmative vote of shareholders representing two-thirds or more of the shares present and voting in person or by proxy as a single class at a meeting of the company's shareholders convened to consider the authorization and approval of the merger agreement.

The chairman, Fosun and certain members of the company's senior management team have agreed to vote all of the shares they beneficially own, which represent approximately 36.0 per cent of the outstanding shares (excluding outstanding options and restricted share units of the company), in favour of the authorisation and approval of the merger agreement and the transaction. If completed, the transaction will result in the company becoming a privately-held company and its ADSs will no longer be listed on the NASDAQ Global Market.

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