SPH takes 35% share in Li Ka-shing's billboard unit - Mar 29, 2006 (BT)

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The Straits Times / The Business Times News On SPH

SPH takes 35% share in Li Ka-shing's billboard unit

Strategic tie-up will give SPH foothold in China's outdoor media sector.

By Wong Wei Kong
Mar 29, 2006
The Business Times

(SINGAPORE) Singapore Press Holdings (SPH) will take a 35 per cent stake in the billboard unit of TOM Group Ltd, a publishing, advertising and Internet company controlled by Hong Kong billionaire Li Ka-shing.

SPH and TOM yesterday announced a strategic partnership in which SPH will invest US$26 million in TOM Outdoor Media Group (OMG) at an implied value of about US$105 million, which includes an existing shareholder loan to OMG of US$30.8 million from TOM. TOM will maintain a 65 per cent stake in OMG.

The partnership will enable TOM and SPH to leverage on their respective strengths and add value to OMG's business, SPH said. OMG operates a diverse network of advertising billboards and unipoles in China, complemented by street furniture and transport advertising. It owns a billboard network of about 300,000 square metres spanning more than 60 mainland cities, and has 16 subsidiaries providing comprehensive nationwide advertising solutions.

Newspaper group SPH first ventured into out-of-home advertising business in 2005. It formed a subsidiary SPH MediaBoxOffice Pte Ltd (SPH MBO) in Singapore, in which it owns 80 per cent, with the remaining 20 per cent owned by IBIZ Asia Distribution, the investment holding company that owns MediaBox Office Pte Ltd (MBO).

SPH said the strategic partnership with TOM will give it a foothold in China's outdoor media sector.

'This is a notable business venture for SPH in mainland China, and in the outdoor segment, we have chosen a huge and accessible market that has the potential to provide healthy returns,' said SPH CEO Alan Chan. 'It's one of our key growth areas. With this partnership with TOM, we get access to 60 mainland Chinese cities, and we can tap into their knowledge and understanding of local market conditions.

'At the same time, this deal allows us to continue building our new media platforms so that we can offer our advertisers multiple and customised ways to reach their target audiences.'

SPH also launched its new online classified platform last week.

Said Tommei Tong, CEO and executive director of TOM: 'SPH is a strong strategic partner and we see many synergies through this partnership. SPH's strong financial resources, expertise in media operations as well as well-established customer base will help maximise OMG's business scale and operational efficiency to take full advantage of future growth opportunities. We believe the partnership is a good starting point for cooperation between SPH and TOM.'

As part of the agreement, TOM will have the right to appoint the CEO and finance director of OMG, while SPH will have the right to nominate two directors to OMG's board, appoint the COO and deputy finance director, and to fill management positions in marketing and business development.

Mr Chan and SPH's executive vice-president for marketing Leslie Fong will join OMG's board. Ms Tong, head corporate general counsel and executive director Angela Mak and chief investment officer Michael Ng will represent TOM on the board.