VisionChina Media Inc., one of China’s largest out-of-home digital television advertising networks on mass transportation systems, has announced an agreement to acquire subway digital signage operator Digital Media Group. The transaction will create the largest ad-based digital signage network in public transportation in China.

The total consideration for the transaction is US$160 million in cash and shares payable by the Company to eligible shareholders of DMG in three installments over two years including the first installment of US$100 million payable at the closing of the transaction. Two subsequent installments of US$30 million each will be paid on the first and second anniversaries, respectively, of the closing of the transaction. Of the initial US$100 million, US$40 million will be paid in cash and US$60 million will be paid in shares.

The transaction has been approved by both companies’ boards of directors and is expected to close, subject to the completion of customary due diligence and closing conditions in the first quarter of 2010.

The combined company will operate bus networks in 18 of China’s most affluent cities, including Beijing, Guangzhou and Shenzhen and will also have exclusive subway networks in eight key cities in China, including all four of China’s Tier I cities, Beijing, Guangzhou, Shenzhen and Shanghai, as well as on Hong Kong’s Airport Express line.

According to Analysys International, VisionChina Media operated 42.1% of the digital mobile television screens and DMG operated 8.1% of the digital mobile television screens in China in the first half of 2009.