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Microsoft Buys Ad Firm for $6 Billion
bain writes "The BBC is reporting that Microsoft has agreed to buy the digital marketing firm Aquantive, in what will be its biggest ever acquisition. The software giant spent almost $6 billion acquiring the agency, in its first bid to tackle the online advertising market. 'The deal is expected to be completed in the first half of 2008, subject to regulation. Microsoft said the expensive price tag was worth it to access the complementary technology of Aquantive. The firm will continue to operate from Seattle as part of Microsoft's online operations, and will help the software giant broaden the scope of services its MSN consumer internet unit can offer. Microsoft is the latest technology firm to pounce on the shrinking independent online advertising sector.'"
aQuantive has ~900 million in assets, and a current shareholder equity of ~600 million. Net revenue is the first quarter of this year was ~14 million.
Microsoft is aquiring them for 6 billion? Sounds about as dumb-ass as Google with DoubleClick (what, 31x premium?).
aQuantive stock is now 64.75 *up 27.88*. I missed it.
As a Microsoft shareholder, I don't like this. What a waste of money! I mean, paying 3 billion would be high, but 6 billion?
Just another "Cubible(sic) Joe" 2 17 3061
Will have its addresses as the newest addition to my hosts file.
You know what's funny about that? If you're using a MS OS, they can ignore your hosts file.
If Microsoft wanted to use Aquantive's patents against Google the last thing that it would do is buy the company. Microsoft almost certainly infringes on some patents that Google owns, especially if you throw in Windows and the rest of Microsoft's software. The Holy Grail of patent litigation is to produce a patent that is being infringed by Windows as the potential payoff can be enormous. If Aquantive sues Google then the possible damages from a counter suit are much lower than the possible damages from a counter suit against Microsoft. If this was about patent litigation then Microsoft would announce a "partnership" (or maybe it wouldn't even do that) and Aquantive would sue Google.
Microsoft is not going to sue any organization that has software patents over patent infringement as Microsoft almost certainly has more to lose than any other player.
Actually that $5.45 for every Internet user on the planet (1.1 billion).
Those who can do. Those who can't sue.
Companies have a statutory duty to their shareholders to operate their business properly.
This especially includes their M&A activity.
Paying a premium of say 10% is usually as high as you can go before shareholders start asking awkward questions.
A premium of 68% is way beyond that level.
It is the sort of level that could get shareholders angry. If enough of them sufficiently angry they can force a company to hold an EGM.
It does not matter who the company is. One worth Billios or one worth a few Millions. The same rules apply to any company with publicly traded shares.
A public Company has to operate according to certain rules. Shareoholders are a huge but largely silent force in the way a company operates. I wish more shareholders stood up and asked the company they own those really awkward questions that can keep a company ethically sound. It is obvious (from their past record) that Microsoft's owners don't really care about how the company operates. In view of the share performance of Microsoft(public record) over the past 3-5 years I think they should do so and with a big degree of urgency.
If I were an analyst (I'm not so don't take this as any form of informed or authorised advice whatsoever) I would not give Microsoft anything but a SELL rating. Naturally you might have other views and opinions. For every seller there has to be a buyer.
I would also rate Novell as a Sell but that is another long and complicated saga that has been discussed to death here and in other forums.
I'd rather be riding my '63 Triumph T120.