Microsoft to buy online ad company
Microsoft Corp. said Friday that it would buy online advertising firm AQuantive Inc. for about $6 billion in cash, paying a hefty premium to try to catch up with major ad deals by competitors over the last six weeks.
In its largest acquisition ever, Microsoft snapped up the last of the big, independently owned concerns that focus on delivering targeted Web ads.
The deal escalated the battle for online advertisers and audiences as Microsoft, Google Inc. and other Internet giants continue to siphon ad dollars from traditional media.
Microsoft has faced criticism for moving too slowly to keep pace with Google, but it agreed to pony up nearly twice AQuantive's market value to acquire the Seattle-based digital marketer.
"These deals say that online advertising is a real market and is growing fast," A.G. Edwards & Sons Inc. analyst Denise Garcia said.
AQuantive is best known for its online advertising agency, Avenue A/Razorfish, which generated more than 60% of its parent's $442 million of revenue in 2006. But analysts said the prize for Microsoft was AQuantive's Atlas division, which helps companies place ads on their sites that are suited to the time of day and viewer. It also delivers video ads.
Microsoft's online competitors boast similar technology. Last month Google agreed to buy DoubleClick Inc. for $3.1 billion, and Yahoo Inc. said it would pay $649 million for the 80% of Right Media Inc. it didn't already own. Time Warner Inc.'s AOL credits much of its resurgence in online advertising revenue to Advertising.com, the ad-serving business it bought in 2004.
Microsoft, based in Redmond, Wash., offered $66.50 a share, far above the $35.87 AQuantive fetched when markets closed Thursday.
"The take-out price represents an astonishing 85% premium over yesterday's closing price, reflecting the scarcity value of quality Internet assets and [Microsoft's] lack of traction in online advertising to date," Youssef H. Squali, an analyst with Jefferies & Co., wrote in a research note to clients Friday.
AQuantive shares soared 78%, or $27.92, to $63.79 after the announcement. Microsoft shares fell 15 cents to $30.83.
Richard Fetyko, an analyst for Merriman Curhan Ford & Co., said AQuantive had surpassed DoubleClick to became the largest ad-serving system available to advertisers. "It's a very generous price," Fetyko said. "But they are buying the jewel of the online ad sector."
- U.S. OKs Microsoft's Purchase of WebTV Aug 02, 1997
- Microsoft to Acquire Web-Based Software Firm Jump Networks Apr 27, 1999
- New Microsoft Ad Campaign Targets AOL Feb 14, 2000
