Microsoft to Sell Digital Ad Agency for $530 Million

August 10, 2009 · Filed Under News · Comment

Microsoft reached a deal on Sunday to sell its digital advertising agency Razorfish to French advertising giant Publicis Groupe for around $530 million.

In a cash and stock deal worth $530 million, Publicis agreed to take over Razorfish which Microsoft had bought in 2007 as part of its acquisition of the agency’s parent company aQuantive. The French advertising major already owns reputed interactive agencies like Digitas and is the fourth largest advertising agency company in the world.

The web advertising agency, Razorfish, was put up for auction by Microsoft some time back. The auction had attracted bids from some of the biggest names in the world of digital advertising including WPP which is the globe’s largest agency company as well as Dentsu, the biggest agency company in Japan.

The deal is expected to close in the fourth quarter of the fiscal calendar after which Razorfish will become an independent unit of VivaKi division held by Publicis. Razorfish is however expected to continue to retain its current management. Last year the ad agency earned revenues of around $400 million. After the acquisition, Publicis is expected to derive around a quarter of its revenue from its digital and interactive advertising business.

Tags: Microsoft, Publicis Groupe, Razorfish

Microsoft to Put Razorfish for Sale, Says Report

June 29, 2009 · Filed Under News · Comment

Microsoft may be planning to sell Razorfish, its digital agency, according to a report posted on the Financial Times website late Sunday.

Microsoft, the world’s largest software maker has reportedly hired Morgan Stanley to facilitate negotiations in the sale of Razorfish and French marketing company Publicis SA is expected to be a frontline bidder according to the Financial Times news report. Formerly called Avenue A Razorfish, the digital agency was acquired by Microsoft in 2007 as part of a takeover deal which saw the software giant buying aQuantive for six billion dollars.

Razorfish is one of the best-known agencies in the field of interactive advertising and marketing. The agency has a long list of reputed clients which includes heavyweights such as McDonald’s Corp, Carnival Cruise Lines as well as Starwood Hotels & Resorts. Citing an analyst, the Financial Times report estimates that Razorfish is worth between $600 million to &700 million. The estimate is based on sales of approximately $400 million notched up by Razorfish last year as well as profit margins of similar agencies which range between 12 to 13 percent. However the news of the impending sale of Razorfish could not be confirmed from any of the involved parties.

Tags: Microsoft, Razorfish