The rumors of last June that Microsoft was shopping around its Razorfish interactive ad agency that they had acquired with aQuantive were apparently correct as today Microsoft and Publicis announced that the latter is acquiring Razorfish for $530 million:
Steve Ballmer, Microsoft’s Chief Executive Officer, said, "We are grateful for the contributions Razorfish has made to our online advertising business since joining the company as a part of the aQuantive acquisition in 2007, and are pleased that they have found a new long-term home with Publicis Groupe. We look forward to continuing to work with Razorfish as one of our agencies, and we’re confident that as a part of Publicis Groupe, Razorfish will build on its success to date in the digital advertising industry."
There are various theories as to why Microsoft wished to divest themselves of Razorfish, but the "continuing to work with Razorfish as one of our agencies" rings true to me. Microsoft did not want want its ability to sell online ads to all ad agencies to be hindered by owning one themselves. The deal is expected to close in the fourth quarter of 2009.
The Financial Times is reporting that Microsoft has retained Morgan Stanley to find a buyer for Razorfish, the online ad agency it picked up when it acquired aQuantive a bit more than 2 years ago. Microsoft is not commenting on the story, but it would make sense since an ad agency is not a great fit for Microsoft’s main Web advertising business which is in the uncomfortable position of courting rival ad agencies. A possible buyer is the French marketing company Publicis Groupe which just last Thursday announced a "broad strategic agreement" with Microsoft.
There had been rumors of an asset swap for Razorfish with ad giant WPP Group in August 2008, but that never panned out and now that two years have passed since the aQuantive acquisition, favorable tax treatment would make an outright sale more likely. It also does not hurt that Microsoft might get $600-$700 million back on the hefty US$6 billion they overpaid for aQuantive.