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Tom Group curbs purchase rumours

By Liu Baijia (China Daily)
Updated: 2006-03-29 14:32

Tom Group said yesterday that it does not have anything to disclose regarding acquisitions, despite reports that the Hong Kong media conglomerate would buy a stake in China's biggest Internet portal, Sina Corp.

Tom Group, listed on Hong Kong Stock Exchange and backed by Hong Kong tycoon Li Ka-shing, issued a statement at midnight on Monday that said it had noticed the unusual changes in transactions and prices of its stocks, but had nothing to disclose in terms of acquisitions or sales of assets.

The company's stock rose by more than 10 per cent on Monday to close at HK$1.79 (23 US cents).

However, Tom Group announced yesterday afternoon that Singapore-based SPH invested US$26 million into its outdoor advertising business for 35 per cent of stakes in the unit, after Hong Kong media unveiled the deal in the morning.

The media company Tom Group, with operations in the Chinese mainland, Taiwan and Hong Kong, has been the subject of rumours in the past week. They said it was in talks to buy a chunk of Beijing-based Sina Corp and become its largest single shareholder.

It was reported that Tom Group would take over Sina stakes from top Chinese online game operator Shanda Interactive Entertainment, both of which are listed on the NASDAQ Stock Market in New York.

Shanghai-based Shanda last February purchased about 19 per cent of stakes of Sina from the open market to become the firm's biggest single investor.

It tried to gain control of Sina's business to tap into the company's Chinese Internet user base. But strong retaliations from existing Sina shareholders prevented Shanda from making progress.

The top Chinese Internet portal is the second-most influential media platform with more than 100 million active users, trailing after State-owned China Central Television. Sina is often a desirable target for companies interested in China's media industry.

Sina maintained its top position in China's online advertising market, but its development in mobile messages suffered heavy blows from regulatory measures and poor preparation of new products.

Jun Tang, president of Shanda, on Monday formally addressed rumours that his company would sell the stakes of Sina to Tom Group.

"We are very confident in the future of Sina and will continue to keep an eye on Sina," said Tang in Beijing.

Tom Group, which owns the biggest media operation in the Chinese mainland, Taiwan and Hong Kong, has its own Internet arm Tom Online, but the latter's strength is mainly on the wireless Internet.

Jim Sun, an Internet analyst with London-based Evolution Securities, said Sina is an ideal target for Tom Group for its media empire and its good relations with the Chinese Government could also ease the latter's concern about the control of Sina.

He added Shanda, which saw a slowdown in its online game business and faces a challenge that its convertible bonds worth US$275 million would mature in 2007 and investors may want to cash them in, so selling Sina shares may become an inevitable choice.

(China Daily 03/29/2006 page9)