Transaction creates market leader in China's bus and subway mobile television advertising markets
BEIJING, Oct. 15 /PRNewswire-Asia/ -- VisionChina Media Inc. ("VisionChina Media" or the "Company") (Nasdaq: VISN), one of China's largest out-of-home digital television advertising networks on mass transportation systems, today announced an agreement to acquire Digital Media Group ("DMG"), a leader in China's subway mobile television advertising market. The transaction will create the largest and most comprehensive mobile television advertising network in China, furthering VisionChina Media's goal of becoming the foremost digital television platform reaching daytime audiences in China.
The total consideration for the transaction is US$160 million in cash and shares payable by the Company to eligible shareholders of DMG in three installments over two years including the first installment of US$100 million payable at the closing of the transaction. Two subsequent installments of US$30 million each will be paid on the first and second anniversaries, respectively, of the closing of the transaction. Of the initial US$100 million, US$40 million will be paid in cash and US$60 million will be paid in shares.
The transaction has been approved by both companies' boards of directors and is expected to close, subject to the completion of customary due diligence and closing conditions in the first quarter of 2010.
Upon closing, the combined company will operate bus networks in 18 of China's most affluent cities, including Beijing, Guangzhou and Shenzhen. The combined company will also have exclusive subway networks in eight key cities in China, including all four of China's Tier I cities, Beijing, Guangzhou, Shenzhen and Shanghai, as well as on Hong Kong's Airport Express line. According to Analysys International, VisionChina Media operated 42.1% of the digital mobile television screens and DMG operated 8.1% of the digital mobile television screens in China in the first half of 2009. The combined company will provide a strong platform for the long-term development of the nationwide digital mobile television industry in China.
"Combining our company with DMG is an exciting and important development for VisionChina and our industry," said Mr. Limin Li, chairman and chief executive officer of VisionChina Media. "With the largest mobile television advertising network in China, covering each of China's most economically developed Tier I cities, this combination will fully integrate VisionChina's leading outdoor digital mobile television advertising network and DMG's national subway mobile television advertising network into one seamless network, reaching the above-ground bus network and the below-ground subway network in cities nationwide."
Mr. Li also noted that governmental policies in China support extensive development of new, massive public transit systems in China and that subway systems have become common in large cities as a vital form of transportation.
"The combined company's fully integrated advertising network will deliver real-time television programming to passengers during their commutes, further strengthening advertising value for our clients," continued Mr. Li. "Upon the deal's closing, VisionChina will enjoy an enhanced market leading position, as well as significant synergies across the two complimentary business platforms."
Mr. Li added that the combined company will be well positioned for future expansion of media resources in key cities and will immediately benefit from vast opportunities presented by the 2010 Shanghai Expo.
Thomas Tsao, DMG's chief executive officer said, "The decision to merge DMG with VisionChina is a win-win move for both companies. By allowing VisionChina's leading nationwide sales force access to DMG's subway network in China's largest cities, including Shanghai, significant sales opportunities will be created for the combined company. In addition, customers of both companies will benefit from seamless access to our enlarged national network and enhanced offerings of bus and subway combination cities."
"By giving VisionChina a strong foothold in all four of China's Tier I cities, where approximately 60% of China's advertising dollars are spent, as well as immediate access to the important Shanghai market, this transaction is a great step forward in VisionChina Media's strategic expansion plan and should create strong shareholder value in the near term," said Scott Chen, VisionChina Media's chief financial officer. "The DMG platform brings additional complementary capabilities in content production and information technology as well as complementary assets such as the Shanghai bus shelter network and the Hong Kong Airport Express line. DMG has demonstrated a history of strong growth and innovation since its inception in 2002 and is supported by world-class venture investors including Gobi Partners and Oak Investment Partners. Due to the similarities in our business models and customer base, we expect significant synergies to be realized, and in the coming weeks, we look forward to continuing to work together closely to further quantify such synergies as we develop our integration plan."
Simpson Thacher & Bartlett LLP acted as exclusive legal advisor to VisionChina Media. Orrick, Herrington & Sutcliffe LLP acted as exclusive legal advisor to DMG.
The Company has uploaded a presentation regarding the transaction to its Investor Relations website at http://www.visionchina.cn .
VisionChina Media's management will hold a conference call with investors to discuss the transaction at 8:00 a.m. U.S. Eastern Time on Thursday, October 15th, 2009 (8:00 p.m. Beijing/Hong Kong Time on October 15th, 2009).
Dial-in details for the conference call are as follows:
U.S. Toll Free: +1.866.271.5140
Hong Kong: +852 3002 1672
International: +1.617.213.8893
Passcode for all regions: VisionChina Announcement
A replay of the conference call may be accessed by phone at the following numbers until November 15, 2009.
U.S. Toll Free: +1-888-286-8010
International: +1-617-801-6888
Passcode: 34635482
Additionally, a live and archived webcast of this conference call will be available on the Investor Relations section of VisionChina Media's website at http://www.visionchina.cn .
About VisionChina Media Inc
VisionChina Media Inc. (Nasdaq: VISN) operates an out-of-home advertising network on mass transportation systems, including buses and subways that reaches over 40 million viewers each day in China, according to CTR Market Research. As of June 30, 2009, VisionChina Media's advertising network included 82,349 digital television displays on mass transportation systems in 18 of China's economically prosperous cities, including Beijing, Guangzhou and Shenzhen. VisionChina Media has the ability to deliver real-time,
location-specific broadcasting, including news, stock quotes, weather and traffic reports and other entertainment programming. For more information, please visit http://www.visionchina.cn .
About DMG
Founded in 2002, Digital Media Group (DMG) is China's leading operator of digital media inside subway systems. DMG delivers quality entertainment, information, advertising and its proprietary Passenger Information System (PIS) to over 15 million passengers a day. By the end of 2009, DMG will have over 34,000 digital screens across 32 subway / high speed train lines and bus shelters. DMG maintains presence in nine cities including Beijing, Chengdu, Chongqing, Guangzhou, Hong Kong, Nanjing, Shanghai, Shenzhen and Tianjin. In addition to all 13 lines in Shanghai, DMG also operates Beijing Lines 1 and 2, which provide access to China's richest cultural districts such as Tiananmen Square and the Forbidden City, as well as major business and financial districts. DMG also operates Beijing Line 4 in cooperation with the Hong Kong MTR Corporation Limited. DMG is headquartered in Shanghai, with its R&D activities based in Beijing. DMG group companies include Beijing Eastlong Technology Development Company Limited, Beijing Eastlong Advertising Company Limited, DMG Advertising (Shanghai) Co. Ltd and six DMG operating subsidiaries.
Safe Harbor Statement
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
For investor and media inquiries, please contact:
In China:
Mrs. Helen Plummer
Investor Relations Officer
VisionChina Media Inc.
Tel: +86-139-1167-2124
Email: helen.plummer@visionchina.cn
Mr. Derek Mitchell
Ogilvy Financial, Beijing
Tel: +86-10-8520-6284
Email: derek.mitchell@ogilvy.com
In the United States:
Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Tel: +1-646-460-9989
Email: jessica.cohen@ogilvypr.com
