Microsoft sells up grilled Razorfish

The Financial times reported last month that Microsoft has thrown its digital marketing agency Razorfish on the grill.  The Financial Times rumour microsoft-logonames Morgan Stanley as the financial firm who has been appointed by Microsoft to find a buyer for Razorfish.  What makes this appear to be more of a fire sale is the low price the analyst is rumoured to have placed on Razorfish valuing the company at between $600-700 million dollars.

Microsoft paid $6 billion for aQuantive in May 2007, with a 2x premium on the shares previous days closing price. Some estimates on the purchase price and revenue figures calculated that it might take Microsoft around 15-30 years to recoup its investment in aQuantive. Based on this data and if Razorfish is valued at between $600-700 million this would signal more of a fire sale, so we thought that a link that might be suitable how to Cook Razorfish.

When Microsoft purchased aQuantive it included Razorfish and the Atlas Ad Platform with an original price carrying a 80% premium so this recent valuation rumour for Razorfish seems much too low for such a valuable company. Rumours are that parties reported to be in discussions to buy Razorfish is Publicis Groupe SA the world’s 4th largest marketing company.

publicis-groupeThe biggest points which show that Publicis Groupe SA might be the likely buyer is a recent agreement with Microsoft to establish a broad strategic agreement for digital. This broad agreement aims to ensure the companies can work closely on 3 core objectives: Content, Performance & Audience. Based around these core concepts they can work to bring better value and more efficacy to their clients and seek to potentially level the playing field with Google.

Razorfish is a very successful digital marketing agencies which according to its Wikipedia page in 2008 alone, Razorfish has won over 75 creative awards including 10 Webbys, 16 WebAwards, 3 OMMAs, 2 ADDYs, and 3 Create Awards. Razorfish is also quite a large digital agency with over 2,000 employees worldwide and working with a majority of the worlds largest 500 companies.razorfish

The potential benefit to the buyer of Razorfish is a massive client roll, exclusive technology and a powerful brand which is likely to be worth more than $600-700 million for an agency such as Publicis Groupe SA. If this sales rumour turns out to be true it is likely even in these tough funding climate to start a bidding war as the only growth seems to be in digital.  Sir Martin of WPP recently outlined that their digital is around 25% of their business and they are expanding their digital offering considerably throughout the world, which could be assisted by a purchase such as Razorfish.

The other bigger global agencies besides Publicis Groupe SA which are likely to want a piece of Razorfish are: WPP, Omnicom, Interpublic who could benefit from an increased number of higher growth digital projects.

We have listed some of the manyRazorfish client projects:
Automotive
* Ford – Ford Sync
* Honda Formula One – My Earth Dream
* Mercedes – Mercedes-AMG
* Audi – A4 Global Drives
Consumer Goods
* Coca-Cola – iCoke & World Cup Campaign
* Coors – 4:53 Silver Bullet
* Krafts – Chips Ahoy
* L’Oreal – Garnier Nutritioniste
* Red Bull – Red Bull Fusion
Financial Services
* Visa – Visa Discounts
Healthcare & Life Sciences
* Roche – FluFacts.com
Media & Entertainment
* CNN – Cnn.com
* Conde Nast – Concierge.com
* Netflix – Instant Viewing Player
* Nielsen Media Research – NielsenMedia.com
* Sony – Playstation Portable
* New York Times – NewYorkTimes.com
Retail
* JCPenney – Ambrielle
* Levi Strauss & Co – Levi’s RedWire DLX
Technology & Telecom
* AT&T – Digital Lifestyle Center
* Microsoft – Xbox
* TED – Encyclopedia of Life & Pangea Day
Travel & Leisure
* Northwest Airlines – NWA.com
* Startwood Hotels – Global Search Website

If you want to learn more about Razorfish follow them on twitter.

Update NYTimes confirms that Publicis Groupe purchased Razorfish for $530 million in stock and cash, who will continue to advertise on MSN & Bing as part of a 5 year deal.  Microsoft also confirmed it will continue to spend money with Razorfish as part of the deal.

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