Microsoft to buy Web ad firm aQuantive for $6 bln

By Daisuke Wakabayashi and Eric Auchard

SEATTLE/NEW YORK (Reuters) - Microsoft Corp. (MSFT.O) said on Friday it will buy aQuantive Inc. AQNT.O for $6 billion, paying an 85 percent premium to snap up one of the last large independent companies in a consolidating Web advertising market.

In announcing its biggest acquisition ever, Microsoft has made its most aggressive move to date in trying to narrow the gap with Google Inc. (GOOG.O) in the online advertising market.

Microsoft, the world's largest software maker, said it would pay aQuantive shareholders $66.50 a share, a hefty premium to the previous day's closing share price of $35.87.

Shares of aQuantive shot up to $63.76 in midday Nasdaq trade while Microsoft fell 0.84 percent to $30.72.

The all-cash deal tops a $10 billion consolidation spree across the online advertising market, sparked when Google agreed to buy DoubleClick Inc. for $3.1 billion last month.

"There had to have been some desperation for Microsoft to pay the price that it did," said Morningstar analyst Toan Tran, adding that Microsoft's sense of urgency probably heightened after it lost out on DoubleClick.

"Sometimes, I am worried that Microsoft has Google tunnel vision. It's so worried what Google is doing that it becomes way too reactionary."

Yahoo Inc. (YHOO.O) followed the Google deal by snatching up the 80 percent of Right Media it did not already own for $680 million. On Thursday, WPP Group Plc (WPP.L) said it would acquire 24/7 Real Media Inc. TFSM.O for $649 million.

Microsoft of Redmond, Washington said it would acquire aQuantive, based in nearby Seattle, to expand its push into Internet advertising through aQuantive's tools for serving up online ads and tracking their impact.

"This deal takes our advertising business to a new level, and we are committed to earn a bigger slice of that $40 billion pie that's growing," Kevin Johnson, president of Microsoft's platforms and services division, said on a conference call,

Microsoft expects the deal to close in its next fiscal year starting in July. It would add revenue and operating expense in fiscal 2008, but will not change the outlook for operating income or earnings per share next year, Microsoft said.

Ahead of the wave, French advertising giant Publicis (PUBP.PA) agreed to buy online ad agency Digitas in December for $1.3 billion.

Shares of ValueClick Inc.(VCLK.O), the last sizable independent player in the online ad market, rose nearly 9 percent to $30.25 as investors speculated it could be bought.

YAHOO DEAL LESS LIKELY?

Earlier this month, several newspapers reported that Microsoft was considering a deal worth an estimated $40 billion to $50 billion to acquire Yahoo. A source close to the situation subsequently said that any talks had cooled.