Around the Net

Microsoft, WPP Explore Avenue A Deal

Microsoft has reopened talks with ad holding giant WPP Group about selling Avenue A/Razorfish, the digital ad shop Microsoft acquired as part of its $6 billion purchase of aQuantive in 2007. The software giant never really wanted to be in the agency business anyway, but the question now becomes whether Microsoft can get WPP to buy the company for a high enough price. According to Advertising Age, "what Microsoft paid for the agency and what any holding company would shell out are vastly different figures." Unnamed sources revealed that Microsoft might be willing to unload Avenue A in exchange for 24/7 Real Media's Open AdStream ad-serving tool plus cash.

When it bought aQuantive last May, Microsoft was essentially shelling out $6 billion for three businesses: Atlas, DrivePM and Avenue A. The first two would help the software giant build out its massive ad platform -- Microsoft's main goal -- but the latter, which accounted for 60% of aQuantive's revenue, would bring the company into a whole new business.

According to Advertising Age, there's no way Microsoft will get even close to $3.5 billion for Avenue A. After all, that's nearly the market cap for the whole of WPP rival Interpublic Group -- WPP itself has a market cap of around $10 billion. Being forced to sell Avenue A for a greatly reduced price only underscores how badly Microsoft overpaid for aQuantive. Ad Age estimates that $800 million is the most Microsoft could get for Avenue A. At those prices, it may just want to hold off on a sale.

Read the whole story at Advertising Age »

Next story loading loading..