The company that runs one of China's most popular Internet portals, Sina, on Monday agreed to buy a nationwide digital advertising network including LCD displays, poster frames and in-store sign boards from Focus Media in a deal worth over US$1 billion.
The deal enables Sina to offer customers more ways to advertise than online alone.
"We believe that this business combination will significantly extend our media reach and influence, reinforcing our position as a partner of choice in new-media advertising in China," Sina said in a statement.
The deal leaves Focus Media with its is Internet advertising, movie theater advertising and certain traditional billboards.
Sina agreed to pay 47 million newly issued shares of its common stock to Focus Media in the deal. The shares would have had a value of US$1.37 billion as of the end of trading on the Nasdaq stock exchange last Friday, or US$1.14 billion on Monday. Sina's stock fell over 17 percent on Monday, to US$24.25 per share.
The transaction has already been approved by the boards of directors of both companies and shareholders will not vote on the deal. There are, however, some regulatory approvals needed to close the deal, which Sina expects to be completed in the first half of 2009.