In a bid to keep pace with Internet search leader Google, Inc (Nasdaq: GOOG), British advertising conglomerate WPP Group Plc (Nasdaq: WPPGY) said Thursday it has agreed to buy online ad network and technology firm 24/7 Real Media, Inc. (Nasdaq: TFSM) for $649 million in cash.
WPP, the worldâ€™s second largest advertising company, says it will pay $11.75 per share for 24/7 Real Media, a 4.4 percent premium over the price of the stock at the close of Wednesday trading.
With online advertising expected to exceed $33 billion in 2007, or more than 8 percent of global advertising spending and strong growth anticipated, London-based WPP said combining technology with their current media capabilities will be increasingly important.
â€œOur clients and therefore our industry are becoming more media and technology driven,â€ said WPP chief Sir Martin Sorrell in a statement. â€œ24/7 Real Media significantly enhances our capabilities, technological resources and talent, as well as adding to our geographic coverage and our measurable skills.â€
In a conference call with investors Sorrell said the deal was prompted by Googleâ€™s $3.1 billion agreement to buy online advertising firm DoubleClick, Inc. last month.
In December, WPPâ€™s French rival Publicis Groupe S.A. (Nasdaq: PUB) agreed to buy online ad agency Digitas for $1.3 billion.
WPP says the acquisition will play into its strategic goals of growing revenues in Asia, increasing the contribution from marketing services and the share of the revenue from quantifiable marketing services.
Shares in 24/7 Real Media rose 39 cents, or 3.46 percent, to reach $11.65 in day trading on the Nasdaq Stock Market. WPP American Depositary Shares rose 11 cents, or 0.15 percent, to $75.14.