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Microsoft (NASDAQ: MSFT) has engaged investment bank Morgan Stanley (NYSE: MS) to help it unload digital agency Razorfish. Publicis (OTC: PGPEF) is looking for targets in the online ad space and could be a possible bidder.
Razorfish has been valued at $600 million to $700 million, based on a top line of approximately $400 million for its last fiscal year and peer margins of 12% to 13%. The company boasts 2,000 employees and clients that include Audi, Nike (NYSE: NKE) and Kraft (NYSE: KFT). Microsoft bought the company as part of a $6 billion deal to acquire aQuantive. At the time, Razorfish was known as Avenue A Razorfish, as the result of a merger sealed in the wasteland known as the "dotcom bust."
Microsoft isn't commenting on the proposed divestiture, and Publicis is playing coy. The French marketing company has indicated that funds from a recent refinancing could be used to make some acquisitions, and the company has an eye on digital and emerging markets. No particular targets were identified, and nothing was said about Razorfish specifically. However, analysts seem to agree that Razorfish is probably on the list.
Omnicom (NYSE: OMC) and WPP (LSE: WPP) may be interested, as well, given the Microsoft subsidiary's relative strength in the industry.
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