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Publicis to Buy Microsoft's Razorfish for $530 Million

French advertising company Publicis Groupe SA has agreed to buy Microsoft's digital advertising firm Razorfish as part of an effort to boost its share of advertising on the Web, according to a joint statement released Sunday.

Microsoft Sign
Robert Scoble
Microsoft Sign

According to the statement, the transaction is being valued at $530 million, expected to be provided in a combination of cash and 6.5 million Publicis Groupe treasury shares. As part of the agreement, Publicis, whose clients include Ford Motor , Best Buy and McDonald's, will purchase ad dollars over a five-year term across Microsoft's digital properties.

Razorfish will continue to operate under its brand name and be part of VivaKi, the new Publicis Groupe entity created in June 2008 to reflect independent operations of Digitas, Starcom MediaVest Group, Denuo and ZenithOptimedia. Razorfish's management team, led by CEO Bob Lord, will remain unchanged.

"The acquisition of Razorfish is another step forward in realizing our strategic vision of building a world leader in digital communications, a critically important space for our clients," said Maurice Levy, chairman and CEO of Publicis Groupe in a statement. "More than anything, this acquisition should demonstrate that Publicis Group now presents a wider pool of resources, talent and expertise that will help our clients market their products or services in a way that takes maximum advantage of the new digital world."

Levy added that when the transaction is completed, about 25 percent of the company's annual revenue will come from digital communications. The deal is expected to close during the fourth quarter of 2009.

Publicis is the world's fourth-largest communications company with ad agencies including Leo Burnett, Saatchi & Saatchi and media buyers Starcom MediaVest Group and ZenithOptimedia. In digital advertising, it owns Digitas.