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8/10/2007
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Microsoft's aQuantive Buy Gets Shareholder Nod

The deal is widely seen as an attempt to improve Microsoft's ability to compete against Google as a provider of search advertising.

Shareholders of aQuantive have agreed to accept a buyout offer from Microsoft, according to Securities and Exchange Commission documents filed by aQuantive on Thursday.

Under the terms of the agreement, Microsoft will pay aQuantive shareholders $66.50 in cash per share to acquire all outstanding shares of the digital advertising company.

All told, the deal is worth about $6 billion.

Some analysts have suggested that Microsoft may be overpaying. The $66.50 purchase price represents an 85% premium over aQuantive's closing share price on May 17, the day prior to the deal's announcement.

The purchase price also represents a sizeable, 67-times-earnings multiple and a revenue multiple of 7.6, based on aQuantive's projected calendar year 2008 results.

Analysts at Friedman Billing Ramsey said in a report that Microsoft is paying "a hefty price" for aQuantive. They noted, however, that the company may have had to pay a high premium for the online advertising agency -- whose operating units include Avenue A/Razorfish -- or risk losing it to a rival. Microsoft "must do something to close the gap in online advertising between itself and Google and Yahoo," said the analysts.

In the fiscal year ended in July, Microsoft reported $2.47 billion in revenue in online services, including advertising -- an increase of 7.4%.

In April, Google announced a $3.1 billion deal to buy online ad service provider DoubleClick, a company in which Microsoft was thought to be interested.

One month later, Microsoft said that would acquire aQuantive in its largest purchase to date. The deal is widely seen as an attempt to improve Microsoft's ability to compete against Google as a provider of search advertising.

According to Internet metrics firm ComScore, Google accounted for 50.7% of U.S.-based Internet searches in May, compared to 10.3% handled by Microsoft sites.

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