Focus Media (FMCN) Comments on Muddy Waters Allegations

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FMCN Hot Sheet

Overall Analyst Rating:
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EPS Growth %: +43.3%

Focus Media Holding Limited (Nasdaq: FMCN), China's largest lifestyle targeted out-of-home digital media company, responded today to the allegations raised in a research report by Muddy Waters dated January 6, 2012. Focus Media denies the allegations of impropriety in the Report entirely. The Company maintains that there were no improprieties involved in the transaction alleged in the Report. This transaction related to the insignificant acquisition of a regional distributor in Jilin Province in northeast China to expand the Company's display network. The Acquisition provided for three-year earnout payments of no more than US$3,000,000 in aggregate to the shareholders of FMCN Jilin. During the earnout period, Hunchun Shengtai Ginseng Plantation Co. Ltd. was acquired to gain certain tax benefits. Upon the completion of the earnout arrangement, HSGP became an indirect subsidiary of Focus Media. In addition, one of the original shareholders of FMCN Jilin became a 15% shareholder of FMCN Jilin and continued to operate the business of FMCN Jilin.

Focus Media will release additional information concerning the Transaction in the early part of the week beginning January 9, 2012. In addition, Focus Media will take all necessary legal measures to defend itself against the allegations made by Muddy Waters and to protect the interests of shareholders.

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