With digital M&A activity expected to heat up as 2009 draws to a close, search marketing specialist iCrossing believes the time may be right to give up its independent status. The 11-year-old Scottsdale, AZ-based shop has been in discussions with a handful of potential suitors, the WSJ reports. The impetus for seeking a buyer appears to have come after it received an unsolicited offer from Hearst Corp. That bid, estimated at $250 million, was rejected for being too small, so iCrossing tapped Bank of America as its banker to bring in some more attractive bids. Over the past month, WPP Group, Dentsu, and Aegis Media have approached iCrossing about a possible deal.
iCrossing is backed by big money, and has raised as much as $110 million over the years from the likes of Goldman Sachs, Oak Investment Partners, RRE Ventures and others.
Over the past five years, it has done a few acquisitions of its own. In 2008, iCrossing expanded its European presence after purchasing German search and affiliate shop 3GNet. Before that, it acquired Utah’s Sharp Analytics and London’s Spannerworks in February 2007. Before that, iCrossing bought paid search marketer Newgate Internet and web developer Proxicom.
While the Hearst offer for iCrossing would seem to come out of left field, publishers like Meredith (NYSE: MDP), are increasingly looking to diversify their services. So even though the publisher appears out of the running for now, it’s safe to assume that the traditional ad companies looking iCrossing over could have some competition from other quarters of the media industry.
Still, for the moment, there is a reason to place a bigger bet on Japan’s Dentsu as the most likely candidate to win iCrossing. Even though Dentu’s $700 offer to buy Razorfish from Microsoft (NSDQ: MSFT) was bested by Publicis Groupe’s $530 million bid, the Japanese agency has expressed a strong desire to acquire a digital shop.
Meanwhile, WPP Group and Aegis have tended to concentrate their acquisition efforts in emerging markets, where online ad growth is still growing faster than in the U.S. and Europe. Still, online advertising expected to be up around 5.5 percent in 2010, according to eMarketer. Search’s growth will remain particularly strong, making iCrossing an even more appealing catch.