Microsoft sells Razorfish to Publicis for $530 million

The world's second largest media agency and fourth largest communications group, the Paris-based Publicis Groupe has bought Microsoft's advertising agency, Razorfish, for about $231 million in stock and $299 million in cash, a joint statement issued by the companies said yesterday.

In a deal that was expected, (See: Microsoft to spin-off Razorfish: reports), Paris-based Publicis, the owner of agencies like Saatchi & Saatchi and Leo Burnett, had to ward off stiff final bidding from the likes of Britain's WPP Plc and Japan's Dentsu, apart from eight other firms interested in acquiring Razorfish. 

"The purchase of Razorfish is a new step in our strategic plan to be the unquestionable leader in digital communication…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 CEO Maurice Levy said.

Seattle-based Razorfish, is one of the largest digital agencies, which came into Microsoft's domain as part of its $6-billion acquisition of the digital ad agency aQuantive  in 2007. It will continue to operate under its brand name and be organisationally part of VivaKi, the new Publicis Groupe entity created in June 2008 to leverage the combined scale of the autonomous operations of Digitas, Starcom MediaVest Group, Denuo, and ZenithOptimedia.

In addition, both companies, whose clients include, Renault, Toyota, Nestle, Siemens, UBS, Whirlpool, Coca Cola, Citigroup, McDonald's Corp, Carnival Cruise Lines, MillerCoors, Levi's, Best Buy, Ford, and Microsoft and Starwood Hotels among others have announced that they have signed a five-year Strategic Alliance Agreement that will become effective at the closing of the transwaction.

''When we complete this transaction, approximately a quarter of our annual revenues will come from digital communications, and we believe we have more capacity to grow with new clients,'' Levy said.