November 24, 1999 12:40 PM PST

DoubleClick, Abacus merge in $1.7 billion deal

Internet advertiser DoubleClick and market researcher Abacus Direct have won shareholder approval to merge in a deal estimated to be worth $1.7 billion, bringing together droves of consumer marketing information.

DoubleClick, which delivers ads for more than 11,500 Web sites, has been making acquisitions to secure itself at the top of the online advertising game. In July the company acquired rival NetGravity in a stock transaction valued around $530 million.

Privacy groups have been trying to derail the merger with Abacus on grounds that it could increase the likelihood of corporate abuse of customer data. The deal brings together data on Web surfing habits obtained from the 5 billion ads DoubleClick serves per week and the 2 billion personally identifiable consumer catalog transactions recorded by Abacus.

Under the deal, approved yesterday, DoubleClick will issue 1.05 of its common shares for each Abacus share, which is approximately 10.5 million shares. Based on DoubleClick's closing price of $158 on Monday, the transaction is valued at approximately $1.7 billion, according to the company. The combined market capitalization of the two companies is approximately $8.8 billion.

The companies aim to allow marketers in both media to target potential customers more efficiently. They have vowed to continue to disclose their data-collection practices and to give consumers a choice to "opt out" of their databases.

"The merger with Abacus Direct, along with the recent closing of the NetGravity merger, will allow us to offer publishers and advertisers the most effective means of advertising online and offline," Kevin O'Connor, DoubleClick's chief executive, said in a statement.

Still, the privacy implications of the deal will likely be closely monitored by the Federal Trade Commission, which earlier this month examined online profiling, a growing trend in which firms piece together Net users' personal information and surfing habits to target them with advertising and new services.

The FTC isn't expected to throw road blocks at the merger because of privacy concerns, however.

"We have no grounds to challenge the merger based on privacy concerns. We and the Department of Justice evaluate mergers based on competition issues," an FTC staffer said today. "We're not looking at the Abacus-DoubleClick merger specifically, but we are interested in these privacy issues in general and are sensitive to the concerns."

 

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