DoubleClick Inc. said yesterday that it will sell its European media business to AdLINK Internet Media AG, a German online marketing company, for 30.5 million euros, or about $26.9 million in cash. The deal is expected to close in the first quarter of 2002.
Under the deal, United Internet AG, AdLINK's parent, has the option to sell 15 percent of AdLINK's shares to DoubleClick. Once that option is exercised, DoubleClick has the option to acquire an additional 21 percent of AdLINK stock from United Internet for no additional cost.
In addition, AdLINK entered into an exclusive 10-year deal to use DoubleClick's DART ad serving platform. The company previously was using Engage Inc.'s ad serving technology.
DoubleClick said the deal also allows for cross-selling of both companies' inventory on each other's networks. They also will make available their respective e-mail technologies to each other's clients.
The deal enables AdLINK's clients for the first time to run global marketing campaigns. Those clients include MTV Europe, the Deutsche Borse stock exchange, Internet service provider Austria Online, travel portal Expedia and publishers IDG, Der Standard and The Independent.
DoubleClick CEO Kevin Ryan said the transaction speeds the company toward profitability. If not for the money-losing European media business, he said, DoubleClick could achieve breakeven in the fourth quarter of this year. The company's European media business was responsible for 70 percent of its losses in Europe and only 27 percent of its profits, he said. Overall, its European media business accounted for 80 percent of the company's losses and only 7 percent of its profits.
“DoubleClick benefits by having a very strong ad serving client in Europe,” Ryan said.
The announcement comes amid speculation that DoubleClick plans to exit the U.S. media business as well. That speculation was fueled by the Nov. 11 resignation of the company's president of Global Media, Barry Salzman, who cited “personal reasons.” He will leave the company Dec. 1 but will continue working with it on special projects.
Salzman, formerly president of DoubleClick International, was responsible for the company's global media business, its brand, audience and international networks and its e-mail list services business.
Though Ryan said DoubleClick has no immediate plans to sell its U.S. media business, he would not rule it out if offered a deal similar to the AdLINK transaction.
“We're still committed to the U.S. media business,” he said.
Bruce Dalziel, DoubleClick's chief financial officer, said the AdLINK deal makes sense for the company because it strengthens its position financially.
“[The deal is] a great boost toward being profitable in 2002,” he said. “This transaction takes care of the lion's share of our losses.” It also puts DoubleClick further along in its goal of diversifying away from selling online media in favor of offering various marketing services, he said. “This comes at a time when people like 24/7 [Real Media Inc.] and Engage have much less presence in Europe.”