Microsoft to buy aQuantive for $6 billion

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."

News source: InfoWorld

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6 Comments

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MS was dying to buy an advertising company to keep up with the Joneses Google. Maybe now they'll calm down a bit...

Is this because Microsoft lost that other advertiser deal to Google? Or is this unrelated all together?

I use Firefox plugins to filter out most of the ads. I guess there's a greater chance for me to click a text ad, like those on google search page, than an image. Maybe the google ads are more or less targeted.

I think Microsoft just wasted $6 billion.
It will take a long time (or most probably never) to recover that investment.

I am afraid I have to agree with you. Seems like a desperate move by MS just to keep up with Google on the ad front. Gates once said that Netscape kept him up at night during 90's. Looks like Ballmer found something to keep him awake too.

Yes, it seems like wasted money, but will be recovered in a giffy through the cash cows Office and Windows. I bet Gates and Ballmer constantly curse themselves for not purchasing Google when Page and Brin were basically selling it for little or nothing back in the late 90's.

I just can't stop using Google, I don't think I ever will, Live Search has some cool features though, especially its image search, but Google is like embedded in me. Live needs to also improve its performance, from Hotmail to Live Search its so slow and causes IE 7 to eat a lot memory. Performance is a number one factor why Live is still behind Google and Yahoo.