A number of foreign lenders will finance the transaction.

Bank of America Corp, Citigroup Global Markets Asia Ltd, Credit Suisse AG Singapore Branch and DBS Bank Ltd, among others, have agreed to join Chinese banks in providing $1.53 billion in debt for the deal.

"There have been several suspect companies that have gone private with bank support (in China), but entirely from Chinese banks and mostly from a single Chinese policy bank - China Development Bank. This time we see Western banks. That is a surprising and ominous development," Reuters quoted hedge fund manager John Hempton of Australia-based Bronte Capital as saying. Hempton has written online about Focus Media since August.

While the deal is likely to wipe out losses caused by the Muddy Waters allegations, the privatization marks the third such move since the exits of Alibaba Group Holding Ltd and Shanda Interactive Entertainment Ltd, and is likely to trigger a domino effect, experts said.

"More Chinese companies may follow suit and flee the unfavorable US stock market," said Bao Fan, chief executive officer of China Renaissance Partners, an investment bank in Beijing.

He said Hong Kong is likely to be the companies' next destination, due to its proximity to the Chinese mainland, both geographically and culturally.

hewei@chinadaily.com.cn