TOM Online (TOMO) says it will acquire a wireless entertainment company called Infomax.
Wang Lei Lei, TOM Online Chief Executive Officer, says, "In the TV media alone, we have accumulated a vast amount of content cooperation experiences through our partnerships with more than 200 TV stations. I believe, with the addition of Infomax, TOM Online will be able to further enhance its TV distribution network, which in turn will help promote the growth of our entertainment services."
Through the acquisition TOM Online says it will gain access to Infomax's extensive TV distribution network which reaches out to hundreds of millions of Chinese households. It is expected the purchase will further strengthen TOM Online's leadership in China's wireless Internet market.
Following the acquisition, significant synergies between Infomax and TOM Online are expected to be created in the coming years. TOM Online believes the acquisition of Infomax will produce yet more benefits in the areas of product diversification, operational efficiency and content sharing.
Through its unique relationships with TV operators and other entertainment companies, Infomax has been providing wireless interactive products and services to China's national TV audience since 2003.
TOM Online management believes the purchase presents tremendous synergy potential for enhancing Infomax's existing product portfolio given TOM Online's leadership in SMS, WAP, MMS, CRBT and IVR services.
TOM Online will acquire 100% of Infomax with the maximum valuation capped at CNY600 million. Valuation will be calculated and based on 2.5x – 3.5x of Infomax's FY2006 earnings, and 3.0x – 4.0x Infomax's FY2007 earnings, depending on Infomax's net profit levels in the respective years.
The transaction is subject to customary closing conditions including regulatory approvals but is expected to close sometime in the later part of the 2nd quarter or the third quarter of 2006.