For Immediate Release
Acquires China's Leading Outdoor Media and Advertising Business
with Guaranteed Profit of RMB100 Million
Hong Kong, October 11, 2000----TOM.COM LIMITED ("TOM.COM" or "TOM") announced today that it has signed a framework agreement to acquire 49% or more (up to the maximum permitted by Mainland China laws) of the entire equity interest of Kunming Fench Star Information Industry Co. Ltd. ("Fench Star"), one of the largest outdoor media and advertising companies in Mainland China. Under the agreement, TOM will procure one or more purely domestic Mainland China companies to acquire the balance of the Fench Star equity interest.
The consideration for the acquisition of the entire equity interest in Fench Star is RMB278,610,000 (approximately HK$262,839,622). The consideration will be paid by TOM in accordance with the respective proportion of equity interest that will be acquired in Fench Star.
At the sole discretion of TOM, the consideration will be satisfied (i) entirely by cash; or (ii) by assets swap (the assets to be swapped shall be agreed between the shareholders of Fench Star and TOM); or (iii) by a combination of new TOM shares and cash (if permitted by the Mainland China laws) ; or (iv) entirely by way of issuance of new TOM shares (if permitted by Mainland China laws).
In addition, pursuant to the framework agreement, TOM will enter into an incentive agreement with the senior management of Fench Star ("Senior Management"), whereby a total of RMB33,890,000 (approximately HK$31,971,698) will be distributed to the Senior Management for incentive purposes. The incentive payable to the Senior Management will be satisfied, at the sole discretion of TOM, (i) entirely be cash; or (ii) by assets (the assets being granted to be agreed between TOM and the Senior Management);or (iii) by a combination of new TOM shares and cash (if permitted by Mainland China laws); or (iv) entirely be way of issuance of new TOM shares (if permitted by Mainland China laws).
If Mainland China laws permit the consideration for the acquisition and the incentive payable to the Senior Management to be satisfied by way of issuance of new TOM shares, new TOM shares at HK$5.51 per share will be allotted and issued to satisfy both the consideration and the management incentive.
Subject to the completion of the acquisition and pursuant to the incentive agreement, TOM.COM is guaranteed that Fench Star will have a total net profit of no less than RMB100 million from 2001 to 2003.
"Fench Star is a strategic fit in our roadmap of converging cross-media synergies. This complementary offline business initiative puts TOM in a unique position compared to its competitors, as Fench Star not only brings about an offline advertising channel, but also a strong customer base and advertising expertise. With our network of companies, we can bundle and cross sell online and offline advertising, monetize on our user base and page views as well as yield additional revenue stream," said Sing Wang, CEO and Executive Director of TOM.COM LIMITED.
China's robust advertising market is estimated to top US$6 billion in 2002. Outdoor advertising, representing around 10% of the total market value, records a compound annual growth rate of 21% over the past five years.
"The investment by TOM brings about diverse media cross selling opportunities, which we believe sets a precedent in the China advertising market. With TOM's network of companies and our established outdoor media network, we will be able to take advantage of the large advertising market potential," said Li Jian, CEO of Kunming Fench Star Information Industry Co. Ltd.
The Fench Star acquisition is the latest in a string of recent investments by TOM.COM which include 163.net, YC Press and shawei.com.
About TOM.COM
Founded in October 1999 and an associate of Hutchison Whampoa Limited, TOM.COM LIMITED is a joint venture formed by Hutchison Whampoa Limited, Cheung Kong (Holdings) Limited and other strategic investors. The Company was listed on the Growth Enterprise Market (GEM) of the Stock Exchange of Hong Kong in March 2000. Targeted at Chinese-speaking and global audiences to "Bring China to the World and the World to China", TOM.COM LIMITED is building a multi-lingual mega portal to offer the most comprehensive China-related infotainment content. Headquartered in Hong Kong, TOM.COM has established strong presence in Beijing and Shanghai.
TOM.COM can be found on the Web at WWW.TOM.COM.
About Fench Star
Established in 1992, Kunming Fench Star Information Industry Co. Ltd. is one of the largest outdoor media and advertising companies in mainland China, as well as the industry leader in the western part of China. It also operates a strong outdoor media network and provides a nationwide media agent service in over 19 major cities which include Beijing, Shanghai, Guangzhou and Shenzhen in China for the rental of billboards, neon signs, light boxes and electronic display units. Fench Star also boosts a strong line up of over 300 customers who are leading national and international brands.
Given its reputable brand presence in the market and its strong professional management team, Fench Star recorded around RMB46 million and RMB77 million in turnover in 1998 and 1999 respectively. The company recorded an unaudited profit of approximately RMB11 million and RMB29 million in 1998 and 1999 respectively. Fench Star's net tangible assets as of 1998 and 1999 were approximately RMB67million and RMB89 million respectively.
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Press enquiries:-
Rachel Chan, TOM.COM LIMITED; Tel: 2121 7810; Fax: 2127 7576
e-mail: rachelc@hk.tom.com