DoubleClick sells for USD1 billion

25-04-2005

by Deirdre McArdle

Internet advertising company DoubleClick is to be acquired by a US-based private equity firm in a cash deal worth over USD1 billion.

Hellman & Friedman, a so-called buyout firm based in San Francisco, has a track record of buying into media-related companies. In this latest deal, it has agreed to purchase the New York-based internet advertising and marketing company for USD8.50 per DoubleClick share, or a total of USD1.1 billion.

DoubleClick, which counts America Online and eBay as clients, allows its customers to put ads online and to track their success. Despite a burgeoning online advertising market in the US, DoubleClick has been struggling in recent months. Last week it posted worse-than-expected first quarter results which included a loss of USD900,000, compared to profit of USD7.7 million in the year-ago quarter.

In 2004 the company's sales fell to USD302 million from a high of USD507 million in 2000. It hired investment bank Lazard in October 2004 to look into the company and examine the possibility of a sale of part, or all, of the firm. Lazard concluded that a full sale would be most beneficial and managed the auction for DoubleClick.

"This transaction provides great value to our stockholders and underscores the strength of our industry-leading position and DoubleClick's business model," said Kevin Ryan, DoubleClick chief executive, in a statement. Ryan will step down as CEO of the firm once the sale has gone through in the third quarter of 2005.

JMI Equity, an investment firm that specialises in software and business services, is partnering Hellman & Friedman in the DoubleClick deal. No details of its share of the company have been released.

Hellman & Friedman currently manages in excess of USD8 billion in capital, with investments including internet marketing firm Digitas. The buyout firm also recently increased its stake in the Nasdaq stock market from 14 percent to 20 percent.

"We look forward to partnering with the DoubleClick team to help realise the company's significant opportunities for growth in both its online advertising and marketing and data business," Hellman & Friedman managing director Philip Hammarskjold said in the statement.

Following a report in the New York Post on Thursday, which mooted the possibility of a sale, DoubleClick shares rocketed 16.5 percent to USD8.56. The share price eventually closed on the Nasdaq at USD8.57 on Friday.