Silicon Alley-based ad giant DoubleClick said Thursday evening that it won’t try to match a $7 per-share bid for email marketer NetCreations, effectively ending any chance for the two companies to merge.
That news comes just hours after NetCreations announced that it intends to accept an unnamed third party’s all-cash offer to acquire all of its outstanding shares.
DoubleClick, which had the option of making a counter offer against any outside bids through its earlier merger agreement with NetCreations, will receive a termination fee of $8.6 million, plus expenses, from NetCreations or its acquirer.
DoubleClick and NetCreations announced their intention to merge in early October, in a deal valued then around $191 million. In that agreement, DoubleClick said it would offer 0.41 of its shares in exchange for every outstanding share of NTCR, or about $12.15 per share, a 17 percent increase over NTCR’s 10-day average price.
But since then, as DoubleClick’s stock price dipped, so too did the payoff to NetCreations. At the close of trading Thursday, the deal would have meant that DoubleClick would be offering $3.76 per share of NTCR, currently trading at $6.65. Another incentive to take the third party deal would be the immediate payoff. An all-cash deal allows NetCreations shareholders — and the two founders still own a majority of the shares — to convert their holdings directly to cash, rather than taking a chance with holding stock in a steadily sinking market.
DoubleClick, which reported about $590 million in cash and marketable securities in its last regulatory filing, seems to have had enough in the bank to top the $108 million offered by the unnamed company.
But company executives said that changing situations for both companies — NetCreations said it would likely post a sizable fourth-quarter loss, instead of a profit — convinced DoubleClick not to start a bidding war.
“We are disappointed that NetCreations won’t be a part of our success, but considering NetCreations’ recently announced operating results and our own internal progress on email, we have decided not to raise our existing offer,” DoubleClick chief financial officer Stephen Collins said in a statement.
While the announcement also means that DoubleClick’s much-touted expansion of its email services will not be progressing as the company had publicly planned, Collins seemed nonplussed, citing the company’s in-house email growth.
“Since its launch in October, DARTmail [DoubleClick’s email management system] has quickly scaled to deliver over 90 million emails a month on behalf of an expanding list of over 60 customers,” he said. “In addition, over the last two quarters, DoubleClick’s email list services business has increased from 2 million to 18 million names under management.”
That list services business was to be one of the chief areas impacted by the NetCreations acquisition. DoubleClick had said that a merger with NetCreations would put a total of about 22 million email addresses under its control, 15 million of which would have come from the smaller firm. That move would have helped DoubleClick win some credibility in an arena which has continued to be dominated by rival ad networks like 24/7 Media and specialty firms (like NetCreations), even after DoubleClick’s late entry into the field.
Collins did not rule out other acquisitions to boost the company’s email services, but did not mention any specific plans.
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