SEATTLE/NEW YORK—Microsoft Corp. said Friday it would buy aQuantive Inc. for $6 billion, paying an 85 percent premium to snap up one of the last large independent companies in a consolidating Web advertising market.
In the biggest acquisition ever made by the world's largest software maker, Microsoft said it would pay aQuantive shareholders $66.50 a share, a hefty premium to the company's closing share price of $35.87 on Thursday.
Shares of aQuantive shot to $63.65 in midday Nasdaq trade while Microsoft fell 0.84 percent to $30.72.
The all-cash deal tops a $10 billion consolidation spree across the online advertising market, sparked when Google Inc. agreed to buy DoubleClick Inc. for $3.1 billion last month.
Yahoo Inc. followed by snatching up the 80 percent of Right Media it did not already own in a deal valued at $680 million. On Thursday, WPP Group Plc said it would acquire 24/7 Real Media Inc. for $649 million.
Ahead of the wave, French advertising giant Publicis agreed to buy online ad agency Digitas in December for $1.3 billion.
"There had to have been some desperation for Microsoft to pay the price that it did," said Morningstar analyst Toan Tran, adding that the sense of urgency probably heightened after Microsoft lost out on DoubleClick to Google.
"Sometimes, I am worried that Microsoft has Google tunnel vision. It's so worried what Google is doing that it becomes way too reactionary."
Microsoft of Redmond, Washington said it would acquire aQuantive, based in nearby Seattle, to expand its push into Internet advertising through aQuantive's tools for serving up online ads and tracking their impact.
"This deal takes our advertising business to a new level, and we are committed to earn a bigger slice of that $40 billion pie that's growing," said Kevin Johnson, president of Microsoft's platforms and services division, on a conference call with analysts.
Microsoft said it expects the deal to close in its next fiscal year starting July.
The company said the deal would add revenue and operating expense in fiscal 2008, but said it will not change its outlook for operating income or earnings per share next year.
Shares of ValueClick Inc., the last sizable independent player in the online advertising market, rose more than 9 percent to $30.54 in Nasdaq trade.
Yahoo Deal Less Likely?
Earlier this month, several newspapers reported that Microsoft was considering a deal worth an estimated $40 billion to $50 billion to acquire Yahoo. A source close to the situation subsequently said that any talks had cooled.
The aQuantive acquisition reduces the chances of a megadeal with Yahoo, the largest online media company, according to Stifel Nicolaus analyst Scott Devitt.
"Microsoft may be more interested in piecemealing together the highest-quality franchises that replicate what Yahoo already has," said Devitt.
A possible deal for Yahoo was seen largely as a way to join forces to slow the growth of search leader Google, which is extending its lead as it continues to gain market share and grow revenue three times faster than both companies.
Microsoft beat other competitors for aQuantive, saying there are only a small number of companies with enough advertising assets to help it gain scale in the business.
AQuantive, a company founded in 1997, helps advertisers target online ads through its Atlas technology unit and offers Web-site development services through its design agency Avenue A/Razorfish.
It also operates an online advertising network that connects buyers and sellers and provides behavioral targeting for advertisers of Web site users. Microsoft said the deal would allow it to strengthen ties with advertisers, ad agencies and Web site publishers.
The acquisition is the latest in a series of smaller deals Microsoft has been making to extend its capabilities in placing ads on everything from video games to mobile phones to its Internet Protocol television platform.
Last year, Microsoft bought Massive Inc., which places ads in video games, and earlier this month, it acquired ScreenTonic, a European mobile phone advertising company.
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