Focus Media board backs management-led buyout offer

Yuan notes The deal would be the biggest such buyout in China

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Chinese advertising firm Focus Media, once the target of short sellers, has approved a management-led buyout offer that will take the company private.

The firm, which is listed in the US, has been accused by Muddy Waters Research of overstating its assets.

A consortium that includes private equity firms will pay $27.50 per share valuing the company at $3.7bn (£2.3bn).

The deal still requires shareholder approval. If completed, it will be the biggest such buyout in China.

It is expected to be completed during the second quarter of 2013, Focus Media said in a statement.

Better off?

Start Quote

Investors are clearly better off with Focus Media no longer participating in US capital markets”

End Quote Muddy Waters

Focus Media operates display advertising screens in offices and commercial spaces in China.

According to the firm, it has approximately 170,000 flat-panel displays in about 90,500 commercial buildings in more than 90 cities in China.

Last year, Muddy Waters accused it of accounting fraud, saying the company had overstated the value of its assets.

Focus Media denied the charges, but the allegations hit its shares, which plunged almost 40% on the day the allegations were made.

Though the stock has recovered since then to about $25 per share, it is still trading well below the peak of around $66 per share in 2007.

Sticking to its accusations of fraud, Muddy Waters said that "investors are clearly better off with Focus Media no longer participating in US capital markets".

The consortium behind the offer includes the Carlyle Group, CITIC Capital Partners and China Everbright Ltd.

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