French advertising company Publicis Groupe SA has agreed to buy Microsoft Corp.’s digital advertising firm Razorfish in a move to boost its share of advertising on the Web, according to a joint statement released Sunday.
The deal is valued at $530 million, comprised of cash and 6.5 million Publicis Groupe treasury shares. The two companies also signed a five-year strategic alliance agreement that will allow Publicis to purchase display and search advertising from Seattle-based Microsoft on favorable terms across Microsoft’s digital properties in exchange for certain minimum guaranteed purchases.
Under terms of that agreement, Razorfish will continue to be a preferred provider to Microsoft for digital strategy, creative and marketing services and Microsoft has committed to spend a minimum amount for those services each year.
In addition to Microsoft, Razorfish’s major clients include Ford Motor Co., Best Buy Co., McDonald’s Cor p. and Starwood Hotels & Resorts Worldwide Inc.
Razorfish will continue to operate under its brand name and be part of VivaKi, the new Publicis Groupe entity created in June 2008 to reflect independent operations of Digitas, Starcom MediaVest Group, Denuo and ZenithOptimedia. Razorfish’s management team, led by Chief Executive Officer Bob Lord, will remain unchanged.
“The acquisition of Razorfish is another step forward in realizing our strategic vision of building a world leader in digital communications, a critically important space for our clients,” said Maurice Levy, chairman and chief executive of Publicis Groupe in a statement. “More than anything, this acquisition should demonstrate that Publicis Groupe now presents a wider pool of resources, talent and expertise that will help our clients market their products or services in a way that takes maximum advantage of the new digital world.”
Levy added that when the transaction is completed, about 25 percent of the company’s annual revenue will come from digital communications, up from around 21 percent currently.
The cash component of the purchase price will be based on the shares’ value, calculated by the average closing price of Publicis Groupe stock during the 20-trading-day period ending on the eighth business day prior to the closing date of the transaction. The transaction is expected to close during the fourth quarter of 2009.
Publicis is the world’s fourth largest communications company with ad agencies including Leo Burnett,Publicis, Saatchi & Saatchi and media buyers Starcom MediaVest Group and ZenithOptimedia. In digital advertising, it owns Digitas.
Razorfish became part of Microsoft’s umbrella as part of the company’s $6 billion acquisition of aQuantive Inc. in May 2007.
Apple and Google Face UK Investigation Into Mobile Browser Dominance
Apple and Google aren't giving consumers a genuine choice of mobile web browsers, a British watchdog said Friday in a report that recommends they face an investigation under new U.K. digital rules taking effect next year.
The Competition and Markets Authority took aim at Apple, saying the iPhone maker's tactics hold back innovation by stopping rivals from giving users new features like faster webpage loading. Apple does this by restricting progressive web apps, which don't need to be downloaded from an app store and aren't subject to app store commissions, the report said.
"This technology is not able to fully take off on iOS devices," the watchdog said in a provisional report on its investigation into mobile browsers that it opened after an initial study concluded that Apple and Google effectively have a chokehold on "mobile ecosystems."
The CMA's report also found that Apple and Google manipulate the choices given to mobile phone users to make their own browsers "the clearest or easiest option."
And it said that the a revenue-sharing deal between the two U.S. Big Tech companies "significantly reduces their financial incentives" to compete in mobile browsers on Apple's iOS operating system for iPhones.
Both companies said they will "engage constructively" with the CMA.
Apple said it disagreed with the findings and said it was concerned that the recommendations would undermine user privacy and security.
Google said the openness of its Android mobile operating system "has helped to expand choice, reduce prices and democratize access to smartphones and apps" and that it's "committed to open platforms that empower consumers."
It's the latest move by regulators on both sides of the Atlantic to crack down on the... Read More