Alibaba buys into Focus Media
Alibaba Group is to pay $1.43 billion for a 6.62% share of Shanghai-based Focus Media, whose digital advertising screens can be seen on streets, in subways and in elevators across 300 Chinese cities.
The e-commerce giant also plans to acquire another 5% interest in Focus Media within the next 12 months. It will also will purchase a 10% stake in an entity controlled by Focus Media founder and Chairman Jason Nanchun Jiang, which controls 23.34% of Focus Media, for $504.7 million. New Retail Strategic Opportunities Fund, a non-consolidated, related party of Alibaba, will acquire a 1.37% interest in Focus Media as well. The total investment, not including the expected additional 5% purchase, will be $2.23 billion, giving Alibaba a 10.32% stake.
Alibaba says the move is a part of its larger New Retail strategy. The deal offers synergies with Alimama, its largest digital-marketing platform. The company now offers new digital channels through which the brands selling on its e-commerce platforms can connect with "middle class consumers and their rising spending power".