Ad firm DG exploring sale, PE interested: source

NEW YORK Fri May 25, 2012 5:07pm EDT

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NEW YORK (Reuters) - Advertising distribution company Digital Generation Inc (DG) DGIT.O is weighing a potential sale and has drawn interest from several private equity firms and rival companies, according to a person familiar with the matter.

Buyout firms Hellman & Friedman, Thoma Bravo, Extreme Reach backed by Providence Equity Partners, and TA Associates are among the parties that have evaluated a potential purchase of DG, formerly known as DG FastChannel, the source said.

Goldman Sachs Group (GS.N) is advising DG on a potential sale, the source said, adding that this is at least the second time in a year that the company has searched for a buyer.

DG's market value, which had approached $900 million just a year ago, has plunged to as low as $240 million, hit by its costly acquisition of digital advertising company MediaMind in June and lower ad volumes amid increased competition.

DG did not return calls for comment. Goldman Sachs, Hellman & Friedman, Extreme Reach and Thoma Bravo declined to comment. Providence Equity and TA Associates had no immediate comment.

Irving, Texas-based DG helps advertisers engage with consumers across television and online media, while delivering ad campaigns.

The company said it helps more than 11,000 global advertisers and agencies connect with target audiences through TV stations and Web publishers in 75 countries.

DG shares closed up 0.7 percent at $8.64 on the Nasdaq market on Friday. The stock has lost about three-quarters of its market value in the past year.

(Reporting by Soyoung Kim Additional reporting by Greg Roumeliotis and Nadia Damouni; Editing by Gary Hill)

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