Fosun in bidding for Forbes Media

Updated: 2014-01-20 17:30

By Wang Ying in Shanghai (China Daily USA)

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Spurred by the news that it has entered the second-round bidding for Forbes Media LLC, Hong Kong-listed Fosun International saw its share price hit a six-year high to close on Thursday at HK$8.55 ($1.10).

Forbes Media, which publishes Forbes magazine and, has been seeking a potential buyer since last November. A total of 18 bids were made for the media group. Six competitors are on the shortlist now, including two Chinese companies, Fosun and G2 Whale Capital Group, the Financial Times reported.

The preliminary offers of the six bidders range from $350 million to $475 million. Deutsche Bank is authorized to run the auction process, added the report.

According to a source quoted by the Shanghai-based Oriental Morning Post, there are two factors that will lead Fosun International to outbid other rivals.

"One is the profit growth rate of Forbes Media can maintain 10 to 20 percent and the other is the media group can make some breakthroughs in the mainland market," said the source, adding that the second target is hard to achieve because they cannot issue serial publications in the mainland market without getting a CN number (equivalent of the International Standard Serial Number).

But Fosun International, a conglomerate that seeks diversification of its investments, has built a stable cooperation with Forbes Media.

In April 2009, the Shanghai-based investment group joined hands with Forbes Media to issue the Chinese-version Forbes magazine in the mainland market. Without a CN number, they can only give copies away free of charge.

But Fosun has rapidly reversed the loss-making situation of Forbes in the mainland market and even posted a profit of "millions of yuan" in the third year, which resulted from running the profitable Forbes forum.

Experts said the deal could be complicated for Fosun because traditional print media is fading in the digital media boom.

Public information shows the family-controlled Forbes Media was founded in 1917 and is currently controlled by the heirs of Bertie Charles Forbes. Apart from publishing the international business magazine and compiling the renowned Forbes rich-list, it also operates a conference business.

In 2006, an investment group, Elevation Partners, whose backers include rock star U2's Bono, bought about half of the company's stake.

"Fosun is stepping into various industries including real estate, retail and insurance. Now, the media business will become a new investment territory of the conglomerate," said Qi Xiaozhai, director of the Shanghai Commercial Economic Research Center.

Fosun International could not be reached for comment by deadline time on Thursday.

Investors are enthusiastic about Fosun's possible deal. Its Hong Kong shares have been rising for five days in a row to their highest point in the past six years.

Analysts said Fosun's recent bullish performance comes not only from the bidding for Forbes.

On Tuesday, Fosun International filed a positive profit alert to the Hong Kong Stock exchange. Guo Guangchang, the chairman, wrote in the statement: "For the year ending 31 December, 2013, profit is expected to increase remarkably in comparison with that of the same period of the previous year."

Just one week ago, Fosun outbid US investment fund Apollo Global Management LLC to acquire an 80 percent stake in state-owned Caixa Seguros e Saude SGPS SA, Portugal's largest insurance group, which is owned by state bank Caixa Geral de Depositos SA.

Industry observers said the deal brings Fosun a step closer to building an investment conglomerate with its core business based on insurance.

(China Daily USA 01/20/2014 page15)