Razorfish: The Players, The Package, The Deal

The Players:
WPP and Publicis are competing to acquire Razorfish, reports PaidContent. That means two things: One of them will be forced to pay more than Razorfish is worth in order to get it; and it will be personal. WPP chief Martin Sorrell and Publicis boss Maurice Levy have a longstanding — and highly entertaining — personal rivalry.
Dentsu, the largest advertising group in Japan, has jumped into the fray as Microsoft opened the books to bidders for its Razorfish agency this week. WPP and Publicis, the rival communications groups, had already been considering an offer for Razorfish, a digital marketing specialist which could fetch around $600m to $700m.
razorfish
A Digital Agency … But That’s Not All…
There are a lot of players talking to Microsoft about Razorfish, among them Publicis, Dentsu, WPP, Omnicom, Interpublic and AKQA‘s private-equity investor, General Atlantic. But to best the field, the winning suitor will likely have to fork over more than money to the agency’s owner, which is looking for “strategic assets,” such as a commitment to buy its advertising offerings or use its technologies.
Microsoft is offering hundreds of millions of dollars worth of ad space to the potential buyer of its digital agency Razorfish as its pitches the deal to the likes of WPP, Omnicom, Publicis Groupe, Dentsu and Interpublic Group, which are all said to have expressed interest.
But Will It Happen?
Yet the chances of a deal being struck in the near term remain remote, according to analysts. For one, the acquisitions market is moribund, with credit still hard to come by for an acquisition that would cost between $600 million and $800 million. Razorfish generated revenue of $408 million last year. WPP, in particular, would seem unlikely to have the financial wherewithal to make an acquisition, after shelling out nearly $1 billion on digital acquisitions over the past few years. It is still in the throes of integrating TNS, too. Even as Sorrell expressed interest, he said WPP earmarked about $160 million for acquisitions, a fraction of what it would take to get Razorfish. That leaves Publicis as the only likely candidate to take on Razorfish.
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