Premier Chinese digital media network operator AirMedia Group Inc. AMCN announced a 5% stake sale in its advertising business ("AM Advertising") to LED supplier Shenzhen Liantronics for RMB 150 million ($24.6 million). The stake sale is a part of AirMedia’s efforts to shift the focus of its media business on advertising in airports and billboard/LED media outside airports, excluding gas stations.
The deal values AM Advertising at around RMB 3 billion ($492 million). The cash consideration is expected to be paid within 10 working days after the share transfer is completed.
After the restructuring, AM Advertising, a consolidated affiliated entity of AirMedia, will own and operate AirMedia’s media business in airports and billboard/LED media outside airports, excluding gas station media network. Also, all AirMedia's other businesses, including digital TV-screens on airplanes, in-flight Wi-Fi business, on-train Wi-Fi business, and gas station media network will be transferred out of AM Advertising and will not be a part of the deal.
The sale is a part of the out-of-home advertiser’s efforts to transform itself into a dominant in-flight and on-train Wi-Fi operator in China. Chinese investors have been favouring media companies of late, and the restructuring will help position the company favourably among its shareholders.
The leading operator of out-of-home advertising platforms in China targets mid-to-high-end consumers. It operates China’s largest digital media network that caters to air travel advertising and sells advertisements on the routes operated by seven airlines, including four of the nation’s largest airlines.
AirMedia presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader consumer discretionary sector include Culp, Inc. CFI, Isle of Capri Casinos, Inc. ISLE and Rocky Brands, Inc. RCKY, each sporting a Zacks Rank #1 (Strong Buy).
Note: $1 = RMB 6.0987
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