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Tom.com Plans Mergers
Tom.com Ltd, a sports and entertainment Internet portal owned by Hong Kong tycoon Li Ka-shing, is planning a series of mergers and acquisitions on the Chinese mainland in September, a top company official said Wednesday.
The Hong Kong-based company targets leading portals, especially those with traditional media background, to achieve portal leadership on the mainland, said Sing Wang, chief executive officer of Tom.com.
"Strategic mergers and acquisitions, as an important method of allocating resources, will benefit the long-term development of Tom.com," said Wang.
Wang did not specify which portals will be targeted. But he stressed that his company will seek partnerships to leverage cross-media synergies.
"Only through convergence and co-ordination with traditional media industry can the Internet, as a new medium, achieve rapid development," Wang stressed.
The company hopes future mergers and acquisitions will be financed with stock swaps and new stock in a bid to form integrated partnerships featuring common interests, Wang said.
Tom.com, which listed its shares in Hong Kong in March, has about HK$700 million (US$89.9 million) in capital.
However, under stock exchange rules, the company is not allowed to issue new shares until September -- six months after it listed on Hong Kong's Growth Enterprise Market.
The company's merger and acquisition plan is good news for cash-trapped mainland dotcoms, most of which rely on scarce venture capital. Industry insiders predict that more than 90 per cent of China's dotcoms will run out of funds by the end of the year.
To strengthen its position in the mainland's growing portal market, Tom.com announced on August 13 that it has signed MOU (memorandum of understanding) agreements to buy a Chinese sports website and advertising company for US$50 million.
The company, a joint venture formed by Li's flagship companies -- Hutchison Whampoa Ltd and Cheung Kong (Holdings) Ltd -- and other strategic investors, will buy Sharkwave Asia Pacific Ltd, which owns sports website shawei.com, for US$20 million. The acquisition is expected to bring annual revenue of HK$230 million (US$29.5 million), Tom.com said.
Tom.com will also pay HK$236 million (US$30 million) for a 70 per cent stake in Yang Cheng Press Advertising Ltd, a sports advertising and event management company in the mainland.
Earlier in May, the company paid US$28 million to acquire a 50 per cent stake in Shanghai Maya On-line Broadband Network Company Ltd, which boasts a leading position in broadband content provision.
"The Chinese mainland has always been and will be the most important market for our business development," said Wang, who was appointed CEO and Executive Director of Tom.com Ltd in July.
He expressed his confidence that Tom.com will gain a competitive advantage in tapping the huge mainland Internet market, citing his company's strong shareholders, excellent management team and abundant capital as the major strengths.
Wang also said that his company will start its e-commerce business "at an appropriate time" in the future because "the current task of top priority" is establishing the website as a household Internet brand.
Targeted at Chinese-speaking and global audiences to "Bring China to the World and the World to China," Tom.com unveiled in June its Hong Kong and mainland versions with a total of 20 channels providing rich and compelling content. (Chinadaily)
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