Microsoft has agreed to pay $6bn in cash to acquire aQuantive Inc, an internet marketing agency. The $66.50 per share offer is 85% higher than aQuantive’s Thursday closing price of $35.87.The premium of 85 per cent that Microsoft is paying for Aquantive reflects a heated race for the few remaining online advertising businesses. The deal caps a month of furious activity in the sector which began in mid-April with Google’s $3.1bn purchase of DoubleClick Inc, a company that provides technology used by website publishers to deliver advertisements to viewers. Companies like DoubleClick and aQuantive help provide the delivery of “display” ads on websites such as banners and boxes, which lead users to advertiser’s websites. Google is already the leading provider of keyword search advertising, which suggests sponsored links along with search results.
Microsoft lags far behind Google and Yahoo in online advertising due to the lower traffic on its own destination website, MSN, and does not want to get left behind in the industry’s rapid expansion. Online marketing is expected to grow nearly 30 per cent this year, way ahead of other forms of advertising. Acquiring aQuantive’s technology will allow Microsoft to deliver ads to third-party websites. It is hoped the deal will strengthen Microsoft’s internet business. Aaron Kessler, an analyst at Piper Jaffray, estimates the online advertising market to be worth about $25bn this year and expects annual growth of about 17 per cent over the next five years.
