Alibaba Taps Digital Display Market With Focus Media Stake

E-commerce giant Alibaba Group Holding Ltd. agreed to invest 15 billion yuan ($2.2 billion) in digital advertising service provider Focus Media Information Technology Co. Ltd., Focus Media said Wednesday.

The deal gives Alibaba and two of its units a total holding of 7.99% in Focus Media, China’s largest digital marketing company, with the option to increase the stake.

Focus Media said the investment will forge a strategic partnership between the two companies to jointly explore digital marketing in the new-retail boom. Alibaba created the new-retail concept featuring a combination of online and offline services.

Founded in 2003, Focus Media operates a liquid crystal display (LCD) network for advertising in offices and apartment buildings in 300 cities. The company said it plans to expand the network to 500 cities, covering 500 million urban consumers.

Under the agreement, Alibaba will acquire a 5.28% stake in Focus Media for 7.67 billion yuan. Meanwhile, the company’s subsidiaries Alibaba Investment Ltd. and New Retail Strategic Opportunity Fund will purchase a combined 2.71% stake for $594 million.

Separately, the e-commerce company will also invest $511 million for a 10% stake in Media Management Holding Ltd., which is controlled by Focus Media Chairman Jason Jiang, by subscribing to the company’s new share issuance. The investment will give Alibaba an additional 2.33% interest in Focus Media, according to Focus Media’s statement.

Alibaba may increase its holdings in Focus Media by as much as 5% in the next 12 months, Focus Media said.

Focus Media listed on Nasdaq in 2005 but went private in 2013 before it launched a listing on the mainland market in 2015.

Contact reporter Han Wei (weiha@caixin.com)