Eight US firms close China’s largest-ever leveraged buyout

Eight US firms have come out on top this week after completing what is thought to be China’s biggest ever leveraged buyout – the $3.7bn (£2.2bn) take-private of Chinese advertising display company Focus Media Holding.

The deal, which closed last night (23 May), received shareholder approval in April for a buyer consortium to acquire the remaining shares in the Nasdaq-listed company for $27.50 (£18.23) per American Depositary Share.

The buyer consortium included chairman and chief executive Jason Nanchun Jiang, alongside private equity funds the Carlyle Group, FountainVest Partners, CITIC Capital Partners and China Everbright.

Shanghai-based conglomerate Fosun International, which owned the second-biggest stake in the company after Jiang, became part of the consortium after rolling its equity into the acquisition vehicle.

Advising the special committee at Focus was private equity specialists Kirkland & Ellis, with corporate partner David Zhang in Hong Kong leading a team.

Simpson Thacher & Bartlett provided SEC compliance regulatory counsel to the company, overseen by Beijing-based securities partner Daniel Fertig.

Shearman & Sterling had a smaller role representing Focus Media’s financial advisor, JP Morgan Securities, led by the head of the firm’s Asia M&A group, Hong Kong partner Paul Strecker.

On the buyer’s side, Skadden Arps Slate Meagher & Flom acted for Jason Jiang, with Hong Kong partner and head of Asia Pacific Michael Gisser advising alongside the firm’s Beijing office head and corporate partner Peter Huang in Beijing.

Fried Frank Harris Shriver & Jacobson and Sullivan & Cromwell were co-counsel to the private equity consortium, with Hong Kong corporate partners Douglas Freeman and Victor Chen leading for Fried Frank, and the Sullivan team including Hong Kong M&A partners Michael DeSombre and William Chua. London partner Presley Warner at S&C also assisted.

Paul Weiss Rifkind Wharton & Garrison advised Carlyle, led by Hong Kong corporate partner and office head Jeanette Chan.

Morrison & Foerster (MoFo) acted for Fosun International, with Los Angeles corporate partner Hillel Cohn heading up alongside Hong Kong corporate partner Gregory Wang. Financial transactions partners Kathryn Johnstone in Los Angeles and Peter Dopsch in New York also provided support.

Underwriters on the deal included Bank of America, China Development Bank, China Minsheng Banking Corporation, Citibank, Citigroup Global Markets, Credit Suisse, DBS Bank, Deutsche Bank, ICBC International Capital, ICBC International Holdings and UBS.

Founded in 2003, Shanghai-headquartered Focus Media operates an out-of-home advertising network, which includes managing digital signage screens in offices, elevators and supermarkets across the country.

Jiang’s decision to take the company private followed a number of allegations of fraud from short-seller Muddy Waters.