DoubleClick may have spurned offer from Microsoft
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In what's shaping up to be perhaps Google's most profitable acquisition to date (just watch), there's another story that's starting to squeak out: not only was Microsoft interested in the advertising giant, but apparently DoubleClick shunned a better deal from Microsoft and decided to hop on the Google train regardless.

Or so says John Battelle, chairman of Federated Media and renowned Google watcher. See, while many of us were thinking that Microsoft's calls to the US government to scrutinize the Google/DoubleClick deal were nothing but sour grapes, it turns out that there's not a small amount of interesting shenanigans here.

Battelle writes, "This raises a very important question - why didn't Microsoft match Google's $3.1 billion offer. Smith would not comment on this, but I can report from very good sources that in fact the company did offer to match it, and was willing to pay even more to insure that Google did not corner the online ad market. But for whatever reasons, the private equity firm that owned the majority of DoubleClick's shares decided to go with Google."

Battelle's sources are anonymous, and so for now this must all remain unconfirmed. He's certainly right about one thing: Microsoft has the money, and could have easily afforded to beat Google's offer. Battelle does not speculate as to why this went down this way, but a reader suggested that one needs to look no further than the financial performance of the two companies and the resultant effect of its stock.

Good ol' GOOG has a P/E ratio of 48.62, and while the stock's growth has slowed significantly as compared to 2005, it's still trending upwards. Compare that to Microsoft over the last 1 to 5 years. Flat as can be. Coupled with all of the naysaying about Windows Vista and recent high-profile failures such as the Zune, Microsoft may look like a worse "owner" than Google. Sure, Microsoft's market capitalization is a dizzying $284 billion, well ahead of Google's $150 billion. Nevertheless, GOOG looks better in the short term.

Still, this was an all-cash deal, so stock considerations are likely small to non-existent. If anything, the fact that there is no major stock transaction taking place here other than the buyout of existing shares suggests to me that DoubleClick's owners were looking for cash, and lots of it. Perhaps Microsoft would only offer a mixed stock/cash deal?

Unless there is increased government scrutiny of the deal, we may never know how this deal went down exactly. I do think, however, that this was a major win for Google and a big loss for Microsoft. If Microsoft's almighty dollar couldn't win the day, there's more than a few of us that would like to know why.








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News Source : http://arstechnica.com/news.ars/post/20070422-doubleclick-may-have-spurned-offer-from-microsoft.html