Internet ad firms’ shares spike on Google’s buyout of DoubleClick (update)
Google’s (Nasdaq: GOOG) announcement Friday of its plans to buy privately held DoubleClick for $3.1 billion has led to increased interest in a couple of small-cap companies in the online advertising space.
Shares of digital marketing company 24/7 Real Media Inc. (Nasdaq: TFSM) and Marchex Inc.(Nasdaq: MCHX) were up on Monday on the heels of the announcement as industry observers speculated who might be the next takeover target.
New York-based 24/7 Real Media Inc’s stock was up $1, or by 11.7%, to $9.58 in intra-day trading Monday after trading as high as $9.97 earlier in the day. Volume was heavy – at 2.5 million shares more than twice the company’s three-month average volume of about 987,000 shares. 24/7 Real Media’s stock has traded between $6.72 (on June 14, 2006) and $11.79 (on April 19, 2006) in the past year.
Founded in 1998, 24/7 Real Media sells its products and services through a sales and marketing organization in 12 countries throughout North America, Europe, Asia, and Australia.
Meanwhile, Marchex Inc. shares were up $0.17, or by 1.1%, to $15.29 on Monday. The Seattle-based search and media company’s stock has traded as low as $11.01 (on Jan.22) and as high as $23.24 (on April 21, 2006) in the past year.
Google’s pending buyout of DoubleClick for two private equity firms is expected to close by year’s end.
Analyst Clayton Moran of Stanford Financial Group said the interest in 24/7 Real Media makes sense to him.
24/7 Real Media is in a “very similar business” as DoubleClick in regards to facilitating online advertising campaigns both in display and search advertising, Moran noted. “As such, this deal endorses 24/7’s current value and implies that it is probably higher,” he said.
And since there was an apparent bidding contest for DoubleClick between Google and Microsoft, it is highly possible that Microsoft might be on the prowl to add a similar company to its portfolio, said Moran.
“There’s been a pretty strong consolidation trend in the industry in general and with that backdrop and 24/7’s strengths, it is likely that 24/7 could be a takeover candidate,” he said.
Marchex, on the other hand, might be similar to DoubleClick but “not really comparable,” he said. “Their assets are much different so the DoubleClick acquisition doesn’t have any really direct implications for Marchex’s value,” Moran said.
