By Chandni Doulatramani
July 16 Advertising distribution company Digital
Generation Inc (DG) said it is reviewing strategic
options, including a sale, a month after rebuffing a takeover
bid by rival Extreme Reach Inc.
DG's shares rose 25 percent to $12.00 in after-market
trading. They closed at $9.61 on Monday on the Nasdaq.
The company said it is reviewing the feasibility and
relative merits of various financial strategies, which may also
DG, formerly known as DG FastChannel, rejected Extreme
Reach's bid of more than $20 per share, or $550 million, Reuters
reported last month citing a source familiar with the matter.
The company might be open to taking itself private, said
Christopher Ferris, an analyst at Noble Financial Capital
Ferris, who has a "buy" rating and a $19 price target on the
stock, said DG may want to build its combined digital
advertising delivery platform away from the public space.
The analyst, who reckons DG is unlikely to reconsider a
proposal from Extreme Reach, said Google Inc and Yahoo!
Inc may be potential suitors.
A private takeover, however, is more likely as a deal with
Google would have anti-trust concerns, while Yahoo has just
named a new CEO, Ferris said.
Reuters first reported on March 25 that DG had hired Goldman
Sachs Group to find a buyer and has drawn interest from
several private equity firms and rival companies, citing a
separate source familiar with the matter.
The company enables the electronic delivery of
advertisements, syndicated programs, and video news releases to
broadcasters, online publishers and other media outlets.