DoubleClick Seeks Suitor
DoubleClick Seeks Suitor
By Wendy Davis
Tuesday, November 02, 2004
DoubleClick's announcement Sunday night that it hired Lazard Freres & Co. to "explore strategic options," coming just days after another disappointing revenue forecast, signaled to some industry observers that the company's key decisions have left it so weak that it must either seek an acquirer or sell off its divisions.
"We do think that DoubleClick has been missing out on a lot of the growth that's been going on in this year in the online advertising space," said Ken Marlin, managing partner of investment bank Marlin & Associates. "DoubleClick as a company might be better off strategically if it were part of a larger company that is addressing this space."
The formerly high-flying DoubleClick, which went public in 1998, once traded at $135 a share; as of Monday, it was trading at $7.12 a share--and that represented a 12 percent increase from last Friday.
In Sunday's statement, DoubleClick said its options included a sale of all or part of the company, a possible spinoff, share repurchase, or extraordinary dividend. DoubleClick declined to comment further for this story.
Marlin speculated that DoubleClick could be acquired by an ad agency; an ad-supported Internet company such as Yahoo! or Google; the major marketing/advertising holding companies (Interpublic Group, WPP Group, and Omnicom), or the publishing company VNU NV, which also owns Nielsen//NetRatings.
He said that the agency aQuantive Inc. (Avenue A/Razorfish) would be a particularly good choice for DoubleClick because aQuantive currently competes with DoubleClick to serve ads. An aQuantive spokeswoman declined to comment on whether the agency was considering making an offer, but said that DoubleClick's "DART" for advertisers is the only product within aQuantive's "competitive landscape."
Marlin also predicts that DoubleClick will find a buyer willing to pay about $1 billion for the company within two to six months. But other industry observers predicted that DoubleClick was at least equally likely to be broken up and sold to different buyers, or spun off into components, such as an analytics company and an ad-serving company.
Some date the beginning of the end for DoubleClick to its acquisition of Abacus in a 1999 stock transaction then-valued at $1.7 billion. Abacus, which handled direct mail for catalog companies, had a database of 90 million consumer names. DoubleClick originally intended to merge with its own online database, but abandoned its plans after a groundswell of opposition from privacy advocates.
Others trace company's problems to its decision to focus on ad-serving software. The ad-serving software space is now so competitive that DoubleClick has had to continually lower its prices. In the last 18 months, prices are believed to have fallen from 30 cents per thousand impressions to between 3 cents and 11 cents today.
If DoubleClick is acquired by an agency or agency group, the company would have come full circle from its beginnings as a division of Poppe Tyson, which was a unit of Bozell, Jacobs, Kenyon & Eckhardt, which was ultimately acquired by Interpublic.