Microsoft has announced plans to acquire aQuantive, a digital marketing services agency, for around $6 billion. Microsoft said aQuantive's 2,600 employees will be incorporated into its online services business, dedicated to growing advertising on the company's MSN portal, its Windows Live online services, the Xbox Live gaming platform and Office Live services. AQuantive will still be the largest deal in the company's history, and represents 2% of Microsoft's market capitalization. Microsoft and aQuantive are putting teams in place now to work on the integration plan.
Microsoft Chief Financial Officer Chris Liddell acknowledged Microsoft was in a competitive bidding war for the aQuantive deal - one reason the software giant is paying a significantly higher price per share for the company than its current market value. The deal, which values aQuantive at $66.50 per share (a huge 85.4% premium), is expected to close in the first half of Microsoft's fiscal 2008. Liddell defended the price Microsoft is willing to pay for aQuantive because of the deal's strategic significance: "
We believe it is exactly the right company to buy. We're willing to use the terms of our balance sheet to drive growth through acquisition and at times will make strategic bets when necessary."
AQuantive offers on-demand video and IP television advertising, Avenue A Razorfish service which puts together packages of online advertising for clients, Atlas - a business that offers software and services for digital ad placement and finally DRIVEpm which helps advertisers and publishers manage campaigns and ad inventory. Microsoft will be finally able to offer display advertising on any Web site and the deal will also improve Microsoft's ability to reach a range of advertising channels, according to Kevin Johnson, president of Microsoft's platforms and services division. Johnson also said the company still disapproves of Google's planned purchase of DoubleClick. "
Consider on one hand: aQuantive is in three lines of businesses. Microsoft today is in none of those businesses. Google and DoubleClick have overlapping businesses ... that will give that combined entity 80 percent or more market share. We believe and continue to believe that transaction will reduce competition."
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