Internet incubator CMGI Inc said Monday it has struck a deal to acquire online advertising services firm AdForce Inc in a stock swap valued at roughly $500m. Terms of the agreement call for Andover, Massachusetts-based CMGI to issue 0.262 shares for every AdForce share held. The deal is expected to close later this year, although no specific date was given. Based on Friday’s CMGI closing price of $80, the offer values AdForce at $20.96 per share, a 7.5% premium over its Friday close of $19.50.
The acquisition of AdForce and its 300 customers comes as part of an overall internet advertising push by CMGI, which also owns stakes in online advertisers Engage Technologies Inc and Adsmart Inc. CMGI said the acquisition of AdForce’s ad serving and measurement tools is an important step in reaching its goal of building a fully-integrated, interactive marketing machine. The rewards for CMGI could be plentiful, with the market for online advertising services expected to grow to more than $32bn by 2004, according to Forrester Research.
The deal could also spell trouble for AdForce rival DoubleClick Inc, which derives about 40% of its revenue from Alta Vista Inc, in which CMGI bought a majority stake earlier this year. With the ability to handle Alta Vista’s advertising needs – as well as those of the roughly 50 other CMGI affiliated companies – now in- house, DoubleClick could be left in the cold. Fast-growing AdForce only went public in May but has already expanded into Asia, opening offices in Hong Kong and China earlier this month.
The acquisition furthers a relationship established between AdForce and CMGI earlier this year as a result of AdForce’s partnerships with Engage and Adsmart. AdForce is currently the primary ad-serving company for the Adsmart Network. In addition, Engage and AdForce have been working on a collaborative effort that combines AdForce’s ad management system with Engage’s precision profiling technology and consumer interest data from Engage Knowledge, a database containing roughly 30 million profiles.
