Deal to give Tom stake in Ming Pao
Media and internet company Tom Group has agreed to swap its 50 per cent stake in the loss-making Chinese news weekly Yazhou Zhoukan for a stake in newspaper publisher Ming Pao Enterprise, the two companies said yesterday.
The media flagship of tycoon Li Ka-shing will sell the 50 per cent stake for $16.2 million. Ming Pao will issue 12 million new shares at a price of $1.35 each to settle the transaction.
Tom will hold a 2.96 per cent stake in Ming Pao, booking a disposal gain of $14 million arising from the deal based on the consideration less the carrying value of the investment.
Tom had written off all carrying value on the magazine in its 2002 results.
'We do not rule out increasing our stake in Ming Pao in the future,' Tom's chief executive Tommei Tong Mei-kuen said yesterday during the announcement of the company's results.
She said the 50-50 joint venture had not contributed much to the magazine's development over the past four years. Tom acquired a 50 per cent stake in Yazhou Zhoukan from Ming Pao in 2001 for a cash consideration of $60 million.
Total valuation of the news weekly at the time was $120 million but has since fallen 73 per cent to $32 million.
Ms Tong said both companies would be able to leverage each other's markets to boost growth.
'As Ming Pao has a good distribution network in the North American market due to its overseas editions, and our strength is in the distribution of our mainland publications, we can co-operate to explore new markets in the future,' she said.
Last year's net losses at Yazhou Zhoukan narrowed 25 per cent to $7.4 million from a year ago. Revenue was down 4.3 per cent to $48 million.