Business News
Focus Media Announces the Restructuring of its In-store Advertising Unit and Terminating of its Remaining Wireless Advertising Business
Thursday 11. December 2008 - Focus Media Holding Limited (NASDAQ:FMCN), China's largest digital media group, today provided an update on the expected charges resulting from the restructuring of its CGEN in-store advertising network and announced the termination of its remaining wireless advertising (interactive marketing) business.
As previously announced on November 11, 2008, the company has now finalized its restructuring plan for its CGEN in-store advertising business as follows:
1. According to the terms and conditions in the CGEN Share Purchase
Agreement dated as of December 8, 2007, in addition to the initial
payment of $168 million in cash paid, Focus Media was to make
additional payments of up to $182 million, partly in cash and partly in
Focus Media ordinary shares (valued at the per share equivalent of
US$53.42 per ADS) contingent upon CGEN meeting certain earnings targets
during the twenty four month period following the closing of the
transaction. Because the 2008 performance of CGEN’s in-store
advertising business failed to reach the minimum conditions required
for any additional earn-out payment, Focus Media has terminated the
earn-out provisions in the CGEN Share Purchase Agreement and will make
no further payments relating to CGEN acquisition;
2. Focus Media plans to restructure CGEN’s current in-store advertising
business. As a result, Focus Media expects to incur non-cash one-time
restructuring charge of approximately $200 million in the fourth
quarter of 2008.
In addition, Focus Media announced it will terminate its remaining wireless advertising (interactive marketing) business due to changes in market conditions. As a result, Focus Media will incur additional one-time non-cash impairment charges of approximately $20 million in the fourth quarter of 2008, representing all of its remaining tangible and intangible assets relating to its wireless advertising business.