Petsky: Marketing Services Deals Drove Q1 Mergers

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The marketing services portion of the direct marketing industry outpaced other sectors in the number of mergers and acquisitions during the first quarter as well as in their value, according to Petsky Prunier's quarterly deal report.


Petsky Prunier, New York, is an investment bank that advises on marketing industry-related mergers and acquisitions.


Transaction volume for the DM industry totaled an estimated $6.6 billion, with marketing services companies posting $3.2 billion in volume. The marketing services segment also accounted for more than half of the quarter's 107 transactions, including the $1.85 billion acquisition of search engine provider Ask Jeeves by InterActiveCorp.


A surge of interest in interactive advertising services in the quarter helped drive the marketing services deals. With 17 transactions, interactive ad services M&A activity posted a 70 percent increase in volume and value compared with the same period last year.


In the marketing technology sector, the number of deals declined from last year. However, the value of the deals in the first quarter jumped 100 percent for a total of $2.2 billion. The largest deal was IBM's $1.1 billion purchase of Ascential Software, which makes products involved in building data warehouses.


Marketers were involved in 23 transactions in the quarter for a total value of $1.2 billion, including InterActiveCorp's $720 million purchase of Cornerstone Brands. Cornerstone's portfolio includes Frontgate, Ballard Designs and Garnet Hill. Also in the quarter, 1-800-Flowers.com bought Cheryl & Co. for $40 million, Polaris Venture Partners invested $30 million in Art.com and RCG picked up OneTravel for $26 million.


The first quarter also featured IPOs by three interactive companies: FTD, Odimo and Fastclick.


Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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