Microsoft snaps up web ad firm for USD6bn
18-05-2007
by Emmet Ryan

Microsoft has turned up the heat in the online advertising market by purchasing aQuantive in a deal worth around USD6 billion.

The IT giant's offer of USD66.50 per share is a whopping 85 percent premium on aQuantive's closing price of USD35.87 on Thursday. News of the deal saw the price rise to USD64.75 on the Nasdaq in pre-market trading on Friday.

aQuantive, which has around 2,600 employees, will continue to operate from its base in Seattle and become a part of Microsoft's online services business. The online advertising firm reported a profit of USD54 million on sales of USD442.2 million in 2006.

"Today's announcement represents the next step in the evolution of our ad network from our initial investment in MSN, to the broader Microsoft network including Xbox Live, Windows Live and Office Live, and now to the full capacity of the Internet," said Microsoft chief executive Steve Ballmer.

The purchase of aQuantive snaps a recent losing streak for the Redmond firm where it has missed out on several potential takeover targets.

In a separate deal, WPP, a group of advertising agencies, has added fuel to the online advertising fire by acquiring 24/7 Real Media for USD649 million.

"Our clients, and therefore our industry, are becoming more technology driven," said WPP chief executive, Sir Martin Sorrell. "24/7 Real Media significantly enhances our capabilities, technological resources and talent, as well as adding to our geographic coverage and our measurable skills."

The price of USD11.75 per share is a 30 percent premium over the average closing price of stock in 24/7 Real Media over the past 60 trading days, but only 4 percent higher than Wednesday's close. The price had rocketed as rumours abounded that it could be an acquisition target.

Microsoft had been linked with a possible move for 24/7 but lost out as WPP snapped up the loss-making web advertising broker.

The 24/7 and aQuantive deals follow both Microsoft and WPP losing out to Google earlier this year in the battle to acquire DoubleClick. The internet giant paid out USD3.1 billion for the firm in April. Microsoft was less than pleased with the deal and called for regulatory action to stop the deal going through, arguing that the deal was anti-competitive.