M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Wednesday, September 30, 2009

Sina and Focus Media Drop Deal and then Issue Stock

The FT is reporting today that two NASDAQ-listed Chinese companies, Sina Corp and Focus Media, are walking away from their proposed $1.7 billion sale of substantially all Focus Media's assets to Sina because the Chinese Ministry of Commerce refused to consider approving their application. In the Form 6-K filed by Sina and the Form 6-K filed by Focus Media yesterday, the respective chairman blame the termination of the agreement on the delay and uncertainty regarding closing.

While they were in the filing mood both companies also announced "private equity" transactions.  Sina announced a $180 million sale of 5.6 millions shares of stock to a BVI entity controlled by Sina's CEO and other members of Sina's management chairman.  The FT notes that the sale was at an 8.8% discount to lat close.  For its part Focus Media announced a $142 million sale of 75 million shares to its executive chairman, an approximate 11% discount of its $10.78 closing price.

I wonder what that's about?  I mean, if following a busted deal, one of the parties issues stock to an insider at a discount to the market price for some reason, then I guess that happens.  Not often ... but hey ... why not?  But, now both parties to a busted deal issue stock to insiders at a discount on the same day immediately following the termination of the deal.  That's a bit much.  So, I wonder what's up.

-bjmq 

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