Focus Media Holding Ltd., the Chinese advertising company taken private in New York after pressure from short-seller Carson Block, will gain a listing in Shenzhen through a reverse merger with Jiangsu Hongda New Material Co.
Jiangsu Hongda, a maker of silicon rubber used in baby bottle nipples, will pay 45.7 billion yuan ($7.4 billion) in cash, stock and asset swaps for Focus Media, according to a statement on the Shenzhen exchange Tuesday. The company will also raise 5 billion yuan in a placement to help fund the deal.
Focus Media was among the Chinese companies targeted by Block’s Muddy Waters LLC, which said the operator of billboards exaggerated its network and overpaid for acquisitions. The company rejected the allegations as “innuendo,” with investors led by Carlyle Group leading a $3.8 billion buyout in May 2013.
The deal makes Focus Media one of the first of a batch of Chinese companies that traded in the U.S. to re-list in Asia. Focus Media withdrew its listing from the Nasdaq Stock Market after the Carlyle acquisition.
Muddy Waters, which led criticism of Sino-Forest Corp., first accused Focus Media of overstating its ad display network on Nov. 21, 2011, sending the shares down 39 percent that day.
Jiangsu Hongda produces about 200 kinds of silicone rubber, according to its website. The company’s shares have been halted from trading since Dec. 9.