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Shares of Sina Corporation (NASDAQ: SINA) soared to a new 52-week high Monday following news that the Chinese media giant's deal to purchase assets of Focus Media Holding Limited (NASDAQ: FMCN) likely had fallen through. Rumors had swirled for weeks suggesting that the deal might not be completed.
Sina was set to acquire a portion of Focus Media's business that places advertising in malls, airports, office buildings and other places for $1.66 billion. The agreement is set to expire Wednesday, Sept. 30, without approval from the Chinese Ministry of Commerce. The government reportedly did not respond to repeated requests for approval. Both companies said Monday in a joint statement that they would not extend a deadline for closing the transaction.
The agreement wasn't received well by investors when it was announced in December 2008. The fear was that Sina would be taking on too much on top of its core online ad business, while Focus Media would lose operations that generate more than half of its revenue and nearly three-quarters of profit. While Sina would have acquired valuable advertising real estate, Focus Media would have been left with an internet advertising unit, a movie theater advertising network, and some billboards.
After an initial sell off on the news, shares of Focus Media also rose Monday to a nine-month high.
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