Microsoft’s $6bn acquisition of aQuantive today isn’t just Microsoft’s biggest acquisition ever. It may be the biggest deal for an advertising company in history. Are things getting out of hand in the suddenly red-hot online advertising sector?
AQuantive’s stock price shot up more than 77 per cent today after word of Microsoft’s $6bn takeover. Paying $6bn in cash for a company on Friday that was worth $3bn on Monday might seem over the top, but a closer look at the numbers shows that the valuation Microsoft put on the company falls somewhere between what Google paid for DoubleClick and what Yahoo paid for Right Media.
As Jason Jones points out on Internet Outsider, aQuantive would be worth about $60 based on the multiple Google paid for DoubleClick (33 times earnings). On the other hand, it would be worth about $75 a share if Microsoft used the multiple paid by Yahoo for Right Media (10 times enterprise value divided by revenues). aQuantive’s shares were trading at just under $64 yesterday. Rich? Yes. Insane? Maybe not.
