US internet giant America Online Inc (AOL), the world’s largest internet service provider, has bought a 10% stake in Hong Kong-based, Chinese-language web portal company China.com, which will shortly list on Nasdaq.
China.com’s largest shareholder with 20% is local property and infrastructure developer New World Infrastructure, but China’s government-owned Xinhua news agency is also a shareholder along with Bay Networks, Bechtel Enterprises, Mitsui & Co and Sun Microsystems.
The deal is part of AOL’s aggressive expansion strategy in Asia 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 foothold in the three main constituents of the Greater China market as China.com runs the bilingual web sites china.com, hongkong.com and taiwan.com. It also operates online advertising company 24/7 Asia, as well as the Web Connection, a web-site design firm. Lehman Brothers Holdings is arranging China.com’s $50 million Nasdaq
listing, with approval from US regulators expected to come this week.
According to IDC internet analyst Pete Hitchen, as a shareholder, AOL will add weight and credibility to China.com’s listing. The attraction of the very young stock is going to be very high because they will have AOL on board. This is despite the fact that it is worth relatively little. China.com’s revenue last year was only $10m, mainly from internet advertisements.
