Publicis catches Microsoft's Razorfish for $530 million

Posted Aug 10th 2009 8:00AM by Tom Taulli
Filed under: Deals, Microsoft (MSFT)

For the past few months, Microsoft (NASDAQ: MSFT) had been shopping its interactive agency, Razorfish. Now, there is a deal: Publicis has agreed to pay roughly $530 million for the firm. The deal is part cash, part stock.

Razorfish, which got its start in 1995, has grown into a dominant player in web media consulting. Yet, this is really not a core business that Microsoft is interested in (the company inherited Razorfish in its $6 billion acquisition of aQuantive several years ago). If anything, it poses conflicts with customers that want to use the company's search and marketing software offerings.

Despite all this, Microsoft was able to wrangle some strategic nuggets. For example, Publicis has agreed to a five-year deal where it will purchase display/search adverting, which could prove helpful in getting traction with Bing.com. In fact, Microsoft will even get a 3% stake in Publicis.

But the deal is certainly positive for Publicis. Razorfish is a leader in the digital space, with clients like Ford (NYSE: F), Dell (NASDAQ: DELL) and Best Buy (NYSE: BBY). Actually, Razorfish will increase Publicis' digital business to roughly a quarter of overall sales. And in light of the relentless march of online advertising, this will be a critical element for growth.

Tom Taulli is the author of various books, including The IPO Primer and The Complete M&A Handbook.

Tags: inthenews, microsoft, msft, publicis, razorfish