SBI Inks Deal to Buy Razorfish

  |  November 22, 2002   |  Comments

UPDATE: The $8.2 million transaction would bring to a close the turbulent story of the interactive services firm that symbolized, to many, the Net boom's excess.

Internet professional services firm SBI has signed a definitive agreement to acquire interactive services shop Razorfish for $8.2 million.

The agreement calls for Salt Lake City, Utah-based SBI to issue a cash tender offer of $1.70 for all of New York-based Razorfish's 4.8 million publicly held shares. Both companies' boards of directors have approved the deal, which is expected to close in the first quarter of next year, pending shareholder approval.

The deal will expand SBI's operations, adding Razorfish's offices in New York, Silicon Valley, Boston, Los Angeles, and San Francisco. Approximately 200 Razorfish employees will join SBI's 700-member staff.

SBI said Razorfish's enterprise portal expertise would mesh well with SBI's services offerings, as well as add clients like Cisco, GlaxoSmithKline, and Avaya.

"The acquisition completes a major phase of our long-term growth strategy to build an industry-focused, business-driven professional services firm that has scale, breadth and depth of service, and leading partnerships to delver outstanding work to blue-chip clients," said Ned Stringham, SBI's chief executive and president.

SBI is no stranger to plucking off distressed interactive services firms. In July, the company inked a $4.2 million debtor-in-financing deal to acquire select assets of New York-based Scient, when the interactive consultancy was in Chapter 11. Later that month, SBI paid $42 million to acquire another interactive services firm, Chicago-based Lante.

Razorfish's chief executive, Jean-Philippe Maheu said the deal would give Razorfish the size to compete with the likes of IBM and Accenture, as well as the stability of a well-funded, privately held company backed by GE Capital and Cerberus.

If completed, the deal will mark the final chapter in Razorfish's colorful and turbulent history, which many saw as a prime example of the excesses and missteps of New York's Silicon Alley. Founded by Jeff Dachis and Craig Kanarick in 1995, Razorfish rose from a two-person shop in Dachis' East Village apartment to a sprawling global enterprise with a $2 billion market cap and 1,800 employees.

While praised for its interactive work, Razorfish soon became synonymous with its founders' colorful, and, to some, arrogant personalities. Dachis liked to bring his dog Sophie wherever he went, while Kanarick often changed his hair color. The duo even owned a Lower East Side nightclub, The Slipper Room, which featured cocktails named The Craigar and The Dachismo.

At the height of the boom, Dachis made a widely talked-about appearance on 60 Minutes II, where he said the Internet would "change the course of the way the world is functioning." However, under persistent questioning from correspondent Bob Simon, Dachis struggled to describe what Razorfish actually did, finally saying: "We radically transform businesses to invent and reinvent them."

The dot-com bust that began in April 2000 sent Razorfish spiraling from its heights, collapsing the value of its stock price. The Internet sector collapse also eliminated Razorfish's dot-com clients and cut into the demand for the creative services on which Razorfish built its reputation.

In May 2001, Razorfish promoted former A.T. Kearney consultant Maheu to chief executive. Maheu scaled back Razorfish's size and ambitions, eventually focusing the company on building corporate portals. By July 2001, both Kanarick and Dachis had cut all ties with the firm.

Maheu succeeded in cutting the company's costs and focusing its business on a single area of expertise. Last quarter, Razorfish took in $9.4 million and returned a net loss of $200,000.

Maheu said he and Razorfish's top managment would stay with the company, but final decisions on the management structure would wait until after the deal closed. He said the Razorfish name would likely be phased out over time after the merger's consumation.

pro-rank-tracker-logoPro Rank Tracker is a cutting-edge ranking tracking tool for keeping you up-to-date with all the latest changes in the rankings of your websites and videos.


COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.



Featured White Papers

US Consumer Device Preference Report

US Consumer Device Preference Report
Traditionally desktops have shown to convert better than mobile devices however, 2015 might be a tipping point for mobile conversions! Download this report to find why mobile users are more important then ever.

E-Commerce Customer Lifecycle

E-Commerce Customer Lifecycle
Have you ever wondered what factors influence online spending or why shoppers abandon their cart? This data-rich infogram offers actionable insight into creating a more seamless online shopping experience across the multiple devices consumers are using.




  • SEO Specialist
    SEO Specialist (Marcel Digital) - ChicagoSearch Engine Optimization (SEO) Specialist   Marcel Digital is an award winning digital marketing...
  • SEO / SEM Manager
    SEO / SEM Manager (CustomInk) - FairfaxAre you a friendly, motivated, and inquisitive individual? Are you a positive, out-going leader? Are you...
  • SEO Analyst
    SEO Analyst (XO Group) - New YorkSEO Analyst @ XO Group About this Job, You and Our Team: The XO Group SEO Team is looking for you, a passionate...