ValueClick Buys Back DoubleClick's Stake
DoubleClick liquidates its holdings, which could clear the way for it to make a patent-infringement claim against ValueClick.
As part of its drive to buy back $75 million worth of stock, direct-marketing technology provider ValueClick announced it had bought out the rest of DoubleClick’s stake.
Westlake Village, Calif.-based ValueClick said earlier this month it paid a total of $26.3 million for 9.8 million shares, including DoubleClick’s remaining 7.9 million shares. DoubleClick had been the company’s No. 1 shareholder, with a 9 percent stake.
“These are two very positive developments for our company and our stockholders,” said Jim Zarley, ValueClick’s chairman and chief executive. “Buying our stock back from DoubleClick at its current market price is a tremendous investment that is aligned with our goals for our stock repurchase program.”
However, according to ValueClick’s recent regulatory filing with the Securities and Exchange Commission, DoubleClick was prohibited from suing ValueClick to enforce its patent on ad-serving technology as long as it held at least a 5 percent stake in the company. The two companies had agreed to negotiate for a licensing agreement in the event of DoubleClick selling its stake, according to the filing.
A DoubleClick spokesperson declined to reveal details of the purchase agreement, including whether the companies had reached a licensing deal. A represntative from ValueClick was unavailable for comment.
ValueClick is already the subject of a patent-infringement lawsuit brought by another ad-server, 24/7 Real Media, which sued in February 2002. The 24/7 Real Media case is still pending.
DoubleClick has some history of wielding its patents aggressively. Quickly after it was awarded the patent for ad-delivery in October 1999, it sued competitors L90 and Sabela Media, which was later purchased by what is now 24/7 Real Media. The parties settled in November 2000.
The relationship between ValueClick and DoubleClick began at the height of the dot-com boom. In January 2000, New York-based DoubleClick sunk $85 million into ValueClick, giving the company $10 million in cash and $75 million of DoubleClick stock in return for a 30 percent stake. At the time, DoubleClick saw the deal as a way to hedge its CPM-based ad-serving offerings with a competing cost-per-click network.
As both DoubleClick and ValueClick made acquisitions, their stakes in each other were diluted, with DoubleClick’s ownership of ValueClick falling to 15 percent at the beginning of the year. In April 2001, ValueClick sold its remaining stock in DoubleClick.
ValueClick expanded on its niche in performance-based ad serving to build a DoubleClick-like full-service ad firm for publishers and advertisers, albeit on a cost-per-action basis.
In 2000, ValueClick went on a shopping spree, snapping up a logfile analysis firm, a co-registration company, and a rival performance-based online ad network. In 2001, the company bought online ad server MediaPlex. In March, ValueClick bought affiliate marketing technology company Be Free in a $128 million all-stock deal that gave Be Free shareholders about 45 percent of the combined company’s shares.
ValueClick also announced Wednesday that its board of directors approved adding $25 million to the repurchase program, bringing its total allotment to $75 million. Since beginning its stock repurchase plan in September 2000, ValueClick has repurchased $51.4 million worth of common stock.
