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Razorfish Bidding Saga Over: Publicis Buys It For $530 Million; 5-Year Bing Ad Deal Included

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Update: It was announced officially seconds ago. Details below.

So as I first tweeted late last night, the Razorfish bidding war is over, and the winner is, as expected, Publicis. The price, around $600 million$530 million, and even though this isn’t the highest bid parent Microsoft (NSDQ: MSFT) got, it went with it because the other major component in the deal is an ad buy by the French agency. The other bidders in the race included WPP, Dentsu, Omnicom and three others. Morgan Stanley was the banker on MSFT’s side, while Blackstone advised Publicis on the deal.

Even though Japanese ad agency Dentsu’s bid was higher (around $700 million), Microsoft decided to go with Publicis because of the other part of the deal: the agency, which has clients such as Coca-Cola. HP, GM and Fidelity, will be buying many hundred millions in ads across MSFT search engine Bing and MSN, among other properties.

Deal’s official details and notes from conference call (via Bloomberg):
— Price is $530 million, in a combination of cash and 6.5 million Publicis Groupe treasury shares. expected to close Q3.
— Cash part of the price will be determined based on average Publicis share value in a 20-trading-day period ending on the eighth business day prior to the closing date of the transaction (typical French complexity).
— Based on current share prices, about 55 percent of deal would be in cash, and rest in shares. After the deal clsoes, MSFT will own about 3 percent of Publicis
— In 2008, Razorfish had revenue of about $380 million. Levy said.

4 Responses to “Razorfish Bidding Saga Over: Publicis Buys It For $530 Million; 5-Year Bing Ad Deal Included”

  1. Stephen Klein

    So, this stinks! Publicis uses clients' ad budgets as juice in a deal to purchase a subsidiary. Even if Microsoft media properties are not appropriate, or not appropriately priced, they get stuck with Microsoft ad inventory, because Publicis has committed to $X millions over the next five years.

    Accounting arbitrage. To the possible detriment of fair and balanced media buying on behalf of Publicis clients.