Seeking to expand its already well-honed ability to sell targeted Internet advertisements, online search leader Google Inc. said it has agreed to pay $3.1 billion in cash to acquire ad-management technology company DoubleClick Inc.
The two companies announced the deal after the markets closed Friday. The boards of both companies have approved the takeover, which is expected to close by the end of the year.
New York-based DoubleClick helps its customers place and track online advertising, including search ads, which Google — more than its nearest search competitors Yahoo Inc. (Nasdaq:YHOO - news) and Microsoft Corp. — has turned into an extremely lucrative business.
Shares of Mountain View-based Google rose 3 cents to $466.32 in after-hours trading. DoubleClick has been privately held since 2005.
The sellers are San Francisco-based private equity firm Hellman & Friedman, along with JMI Equity and DoubleClick management.
Commentary:
From DoubleClick’s announcement of the exchange:
Using the new platform, publishers and other sellers make specific inventory available for purchase. Sellers define a minimum bid value - or “reserve price” - for the inventory and specify rules to restrict certain advertisers, formats and content. In parallel, buyers specify the inventory they wish to purchase, and the associated bid value for that inventory. They can also specify a rule to dynamically control the bid so that the bid price is automatically adjusted in line with inventory performance.
From the New York Times:
DoubleClick, which was founded in 1996, provides display ads on Web sites like MySpace, The Wall Street Journal and America Online as well as software to help those sites maximize ad revenue. The company also helps ad buyers — advertisers and ad agencies — manage and measure the effectiveness of their rich media, search and other online ads.
DoubleClick has also recently introduced a Nasdaq-like exchange for online ads that analysts say could be lucrative for Google.
“Google really wants to get into the display advertising business in a big way, and they don’t have the relationships they need to make it happen,” said Dave Morgan, the chairman of Tacoda, an online advertising network. “But DoubleClick does. It gives them immediate access to those relationships.”
From Bloomberg
`Deep Pockets’
Google declined to give financial details for DoubleClick, whose headquarters are in the same building as its own New York offices. The purchase eclipses the $1.65 billion Google spent to buy video-sharing Web site YouTube in November and was 50 percent more than Hellman & Friedman had wanted. A person with knowledge of the talks said last month the firm may seek about $2 billion.
“The amount is mind-blowing,” said Richard Fetyko, an analyst at Merriman, Curhan and Ford in New York. Fetyko follows DoubleClick rival AQuantive Inc., which he rates buy and doesn’t own. “Apparently there was very competitive bidding. Microsoft has deep pockets, but apparently everything has its limits.”
Originally posted
on Friday, April 13th, 2007
Search Marketing, Venture Capitalism, Valuation, Marketing, Social Media, Tagging, Google, Local Search, Brand Management, International Marketing, Technology.
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