August 13, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of digital interactive media provider Focus Media (Nasdaq: FMCN ) rose as much as 13% earlier in the trading session after receiving a leveraged buyout offer from the consortium of FountainVest Partners, Carlyle Group (NYSE: CG ) , CITIC Capital Partners, CDH Investments, China Everbright, and Focus Media's own chairman and CEO, Jason Nanchun Jiang.
So what: The offer price of $27 is symbolic as it would return the stock to levels it hasn't seen since shortly before research firm Muddy Waters released a damaging report that alleged Focus Media was overstating the amount of LCD advertisements within its network while also badly overpaying for acquisitions. Since that report, Focus Media has denied the allegations and announced a plan to return money to shareholders through a dividend in January.
Now what: With Focus Media trading just a few percentage points from the buyout offer of $27, there's very little upside and plenty of potential downside if things don't work out. I have to admit, the variety and scope of the investors here doesn't make me worry about the financing aspect, but, as I've learned first-hand with China-based companies, you can't overlook anything! I'd consider using today's pop as an opportunity to exit.
Craving more input? Start by adding Focus Media to your free and personalized Watchlist so you can keep up on the latest news with the company.