Business News
AirMedia to Acquire Advertising Business on Gate Bridges in Airports
Tuesday 08. July 2008 - AirMedia Group Inc. (NASDAQ:AMCN), the operator of the largest digital media network in China dedicated to air travel advertising, today announced that it has entered into definitive agreements to acquire 100% of the equity interest in Excel Lead International Limited, or Excel Lead, and 80% of the equity interest in Flying Dragon Media Advertising Co., Ltd., or Flying Dragon, which operate the advertising business on gate bridges in 10 airports in mainland China.
The transactions will further expand AirMedia’s air travel advertising network to cover the advertising business on gate bridges in airports, and diversify its media resources to include billboard advertisements, which will help AirMedia to capture the growth opportunities in the air travel advertising sector in China. The transactions may also help AirMedia to win some new and important clients, which have customarily advertised through these media resources, and consequently enlarge AirMedia’s customer base.
Gate bridges in airports serve as the connections between boarding gates and airplanes, and are therefore the areas through which every air passenger must pass before and after they board the airplanes. Advertising on these gate bridges in airports is an attractive offering and has been well received by advertisers including international brand names.
Through the transactions, AirMedia will obtain the contractual concession rights to place advertisements on gate bridges located in 10 major airports in mainland China, including Terminals 1 and 2 of Beijing Capital International Airport and Guangzhou Baiyun International Airport. The acquisition of Excel Lead is expected to close in July 2008 first, subject to various customary closing conditions and three earnout closings by the end of 2008, 2009 and 2010, respectively. The transactions are expected to be accretive to AirMedia’s earnings per share on a non-GAAP basis starting in 2008.
Commenting on the transactions, Herman Man Guo, Chairman and CEO of AirMedia noted, ”The transactions further solidify our leading position in China’s dynamic air travel advertising sector, and evidence our ability to make the strategic acquisition that may expand our network and provide a broader range of advertising opportunities to our clients. I believe that the transactions will allow us to further capture the attractive growth opportunities in China’s air travel advertising sector. We will continue to look for additional opportunities to further consolidate the fragmented traditional air travel advertising market and to achieve our mission of becoming a full-scale air travel advertising provider in China.”
Transaction Details
On July 4, 2008, AirMedia Group, Inc. entered into a share purchase agreement to acquire 100% of the equity interest in Excel Lead from its owner, with the contingent consideration based on the after-tax net profit performance of Excel Lead in the second half of 2008, the full year of 2009 and 2010, respectively, up to RMB189.3 million in cash and 1,530,950 ordinary shares of AirMedia, which equal to 765,475 ADSs of AirMedia, or up to RMB275.5 million in cash only. On July 7, 2008, Beijing AirMedia Advertising Co., Ltd., a consolidated affiliate of AirMedia Group Inc., entered into a share purchase agreement to acquire 80% of the equity interest in Flying Dragon from its owners with a consideration of RMB10 million in cash.