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$6B Paid For aQuantive: Ad Network Bubble?

Posted By Jeffrey Eisenberg On May 18, 2007 @ 9:01 am In Advertising,Blog Buzz | 2 Comments

TechCrunch reports [1]:

Breaking: Microsoft is acquiring advertising network aQuantive, the parent company to Avenue A | Razorfish, Atlas and DRIVEpm, for roughly $6 billion in an all-cash transaction, the company said this morning.

aQuantive is a public company (AQNT) and had a market cap of just $2.8 billion as of yesterday. The acquisition price of $6 billion is a roughly 2x premium on yesterday’s closing price. The acquisition comes after recent big acquisitions by Google and Yahoo in this space. Google bought Doubleclick for $3.1 billion in April. Later that same month, Yahoo acquired competitor RightMedia for $680 million. Just yesterday, WPP Group acquired yet another company in this space, 24/7 Real Media, for $649 million.

2006 revenues for aQuantive were $442 million. Net income as about $54 million.

aQuantive’s operating companies include both tools and ad agencies. The company is located in Seattle.

Are these valuations smart or delusional? I can see it both ways. What do you think?

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[1] TechCrunch reports: http://www.techcrunch.com/2007/05/18/microsoft-pays-6-billion-for-aquantive/

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