French advertising group Publicis Groupe has agreed to acquire Internet ad agency Razorfish from Microsoft for $530 million in cash and stock.
Razorfish will continue to operate under its own brand name and continue to serve as Microsoft's "preferred provider" for Internet advertising, the companies announced Sunday in a joint statement. The deal includes a strategic alliance agreement in which Publicis Groupe will purchase display and search advertising from Microsoft over a five-year period.
"The purchase of Razorfish is a new step in our strategic plan to be the unquestionable leader in digital communication," Publicis Groupe Chief Executive Officer Maurice Levy said in the statement. "Once this acquisition is complete, about a quarter of our revenue will come from digital communication and our ability to grow and conquer will be reinforced."
Publicis Groupe is one of the world's largest media companies, employing about 44,000 people at advertising networks Leo Burnett and Saatchi & Saatchi, as well as media buyers Starcom MediaVest Group and ZenithOptimedia.
Microsoft had reportedly been shopping Razorfish around for the past few months, with top ad firms WPP, Omnicom Group, and Publicis Groupe all expressing interest in Razorfish. Talks were also held between Microsoft and agencies Interpublic Group and Dentsu.
Formerly known as Avenue A/Razorfish, the agency was credited with designing the logo for Microsoft's new search engine Bing, as well as creating the online ads for the ensuing publicity campaign. The Seattle-based agency has more than 2,000 employees and counts Dell, Disney, and Nike among its clients.
Microsoft acquired Razorfish in 2007 as part of its $6 billion takeover of Aquantive. The deal for Aquantive was Microsoft's largest ever and highlighted the importance of supporting more-advanced advertising products and technologies across areas including media planning, video on demand, and Internet Protocol television. The acquisition of Razorfish specifically was considered especially important as a way to give Microsoft a new presence in the ad services business and also help promote its rich media and video plug-in Silverlight.