(Associated Press via NewsEdge) TOM Group, a Hong Kong Internet and media company, said it plans to spend about $200 million to buy out and delist its Internet unit TOM Online.
TOM Group cited a deterioration in the unit's performance because of a changing environment for mobile phone content providers in China. Tom Online sells news, games, ring tones and other content to cell-phone users.
The companies said in a statement the parent is proposing to buy out TOM Online at HK$1.52 ($0.19) a share in cash for the unit's Hong Kong-listed shares, and $15.564 in cash for each American Depositary Share.
TOM Group, which is controlled by Hong Kong tycoon Li Ka-shing, holds about 65.73% of TOM Online's shares.
The $200 million figure is based on the assumption that no outstanding TOM Online share options are exercised. If the options were to be exercised, TOM Group would have to spend about $226 million for the buyout.
The parent company said it intends to finance the buyout with loans from financial institutions, but it didn't give further details.
'TOM is of the view that the short- and medium-term volatility and potential uncertain financial performance for TOM Online make TOM Online poorly suited to remain a publicly listed entity,' the two companies said in the statement.
They said TOM Online has been a wireless value-added service provider in China since its listing in March 2004. Revenue from this service accounted for 91.4% of the unit's total revenue for the nine months ended September.
The companies said recent measures aimed at raising mobile operating standards in China 'have reduced the short to medium-term financial prospects for TOM Online, similar to others in the wireless value-added service industry.'
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