News from the East-->AOL & China.com, what's up with that???
Published on Tuesday, June 15, 1999
BUSINESS
America Online in China.com purchase before shares debut
YVONNE CHAN
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United States internet giant America Online (AOL) has bought a 10 per cent stake in China.com Corp - majority owned by New World Infrastructure - just days ahead of its US$50 million listing on Nasdaq.
The deal highlights AOL's regional expansion strategy and follows an existing agreement with China.com affiliate company, China Internet Corp, to launch an Internet service in Hong Kong later this year.
The acquisition provides AOL with a potential springboard into the mainland, according to internet analyst Pete Hitchen, of IDC Market Research.
"AOL is making a lot of effort to move into the Asia Pacific market.
"We are going to see increasing [incidences] of AOL buying stock in companies with a presence in Hong Kong but with ambition to move into the mainland market as well."
As a shareholder, AOL will add weight and credibility to China.com's share listing, Mr Hitchen said.
"The attraction of the very young stock is going to be very high because they will have AOL as an owner. This is despite the fact that it is worth relatively little."
New World Infrastructure last week boosted its stake in China.com from 12 to more than 20 per cent, making it the majority shareholder.
Xinhua is also a shareholder in China.com, although the size of its stake has not been disclosed.
Lehman Brothers Holdings is arranging China.com's Nasdaq listing, with approval for the proposed sale from US regulators expected to come this week.
China.com runs the bilingual Web sites china.com, hongkong.com and taiwan.com.
It earned US$10 million in revenue last year, earned mostly from internet advertisements.
China.com also operates on-line advertising company 24/7 Asia, as well as the Web Connection - a Web-site design firm.
China Internet - which runs the mainland Internet information service, China Wide Web - has been linked to rumours of a possible Nasdaq listing since 1997.
However, China Internet attracted controversy because of its majority owner, Xinhua, and its failed joint venture with US Internet company PointCast.
Some industry observers believe China Internet will use China.com as an investment vehicle instead.
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