Sina Corp., one of China's biggest internet portals, is acquiring a portion of Focus Media, an advertising and digital media company that was valued at more than $7 billion just over a year ago.

Fierce competition in China and the slowdown in advertising drove the 5-year-old company's value down over the past year, to the point where its core holdings are being sold for just $1.4 billion in stock, reports Forbes.

The sale includes Focus's out-of-home advertising networks, an LCD display network and in-store network. Combined, they amount to more than 100,000 ad monitors and accounted for around half (52%) of Focus Media's revenue and nearly three-quarters (73%) of its profit through the first nine months of this year.

Focus will hold onto its online ad biz, movie advertising network, commercial location networks and traditional billboard business.

The rest goes to the Sina Corporation, an internet giant that The New York Times dubbed a "Chinese version of Yahoo." The portal supports news, blogs and online entertainment. Sina's revenue this year ($360 million) is expected to be less than half that of Focus Media ($800 million).

The deal, which Sina called the "merger of great properties," was approved by the boards of both companies — no shareholder vote was necessary.

Shares of each company plummeted about 16% in early trading after the announcement, as investors worried that Sina paid too much for the assets and that Focus Media would shift directions because of the sale.

In July '07, Sina incorporated Google search features and gave its ad partners access to Google's AdWords platform.

Google and Yahoo enjoy dominant search share in the Asia-Pacific region, but search engine Baidu has seized hold of most of the Chinese market, with more than 60% search share compared to Google's 26%.