Microsoft acquires digital marketing firm for $6 billion

In a $6-billion deal that Microsoft believes would strengthen its internet business, the software giant has acquired digital marketing firm Aquantive in its biggest ever acquisition.

Aquantive advises agencies and website publishers on putting adverts online, connecting buyers and sellers. The media company, which has over 2,600 employees, will continue to operate from Seattle as part of Microsoft''s online operations.

The all-cash takeover will allow Microsoft to expand into the highly lucrative internet advertising market, also being pursued by its archrival Google and Yahoo. The $66.50 per share offer is 85 per cent higher than Aquantive''s closing price of $35.87 on Thursday.

Microsoft has justified paying the price, which represents 2 per cent of its market value, by arguing the complementary technology of Aquantive was worth the price and the deal would help it broaden the scope of services its MSN consumer internet unit can offer.

Kevin Johnson, head of Microsoft''s platforms and services division, said, "This deal takes our advertising business to a new level." Johnson also said that Microsoft was committed to earning a bigger slice of growing online advertising business, currently estimated at around $55 billion.

Analysts, however, suspect the price paid by the software giant reflects its anxiety to make a significant acquisition in the shrinking independent online advertising segment in which its rivals are seen to be strengthening their stake.

For instance, last month search engine giant Google agreed to buy DoubleClick for $3.1 billion, while Yahoo grabbed the 80 per cent of the equity of Right Media Exchange that it did not previously own for $680 million.