Microsoft to Buy DoubleClick

Online advertising sales and hosting company DoubleClick Inc. is considering a sale and is in talks with Microsoft Corp.

The Wall Street Journal reports on its website that DoubleClick Inc. is talking with Microsoft and other potential suitors. DoubleClick is using investment bank Morgan Stanley to help to explord its options, which include a possible stock market listing in addition to a sale.

The advertising firm is majority owned by San Francisco private equity form Hellman & Friedman. They are hoping for at least $2 billion for DoubleClick according to sources.

Such a high price would bring a large return for the private equity firm which took over DoubleClick in 2005 in a $1.1 billion dollar deal.

Since the acquisition they have transformed the company by selling off some units in able to focus on the core business of advertising.

DoubleClick staff in London had not heard anything about the negotiations according to DoubleClick spokeswoman Doireann Gillan. Microsoft representatives in Europe also refused to comment.

Portal companies and other online properties are needing to decide whther it is best to sell and serve ads using their own platforms or to outsource to other companies. This is due to the rapid increase of advertising volume, according to Nate Elliott, an analyst at JupiterResearch.

Search companies like Yahoo and Google have chosen to build systems to sell and serve advertising. Other companies choose to hire companies like DoubleClick to handle it for them.

Microsoft set up its own advertising platform in 2005, selling online advertising on its properties in France. It then launched the service in the US last May. The program, called adCenter, serves up targeted pay per click ads. Microsoft plans to invest $2.4 billion in research and development on it this year.

If Microsoft buys DoubleClick, it will not be its first such purchase. Microsoft purchased Massive Inc. last May, a company that specializes in advertising in video games. It also bought DeepMatrix Corp., a web analytics company.

There is little possibility of future consolidation in the ad serving market due to DoubleClick previously buying its largest competitors.

DoubleClick was founded in 1996 and suffered when the dot com bubble burst in 2000 and 2001.

In October 2004 DoubleClick hired Lazard Freres & Co. to explore its sale. According to a source, DoubleClick had a revenue of about $150 million last year. More than $100 million of that came from serving ads on web pages.

Sources:
http://www.reuters.com/article/ousiv/idUSN2824556120070328?src=032807_1454_FEATURES_merger_talk
http://www.computerworld.com/action/article.do?command=viewArticleBasic&taxonomyName=internet_business&articleId=9014669&taxonomyId=71&intsrc=kc_top
http://www.abcmoney.co.uk/news/28200747062.htm