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Last published at August 9, 2009 at 5:09 PM

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Microsoft sells its digital ad agency Razorfish

Microsoft is selling its digital ad agency Razorfish to French media company Publicis for $530 million in cash and stock, the two companies said Sunday.

Seattle Times technology reporter

Microsoft is selling its digital ad agency Razorfish to French media company Publicis for $530 million in cash and stock, the two companies said Sunday.

The sale, expected to close in the fourth quarter, marks a dramatic downturn in value for the ad agency founded in Seattle.

Two years ago, Microsoft acquired Razorfish in a deal for its parent aQuantive for $6 billion in cash. Even if the $6 billion purchase price was split evenly among aQuantive's three businesses, Razorfish was worth an estimated $2 billion in 2007.

The agency, previously known as Avenue A Razorfish, buys online advertising for clients and builds Web sites for companies such as Best Buy, Ford and McDonald's.

The other aQuantive businesses have been integrated into Microsoft Advertising. They include Atlas, which gave Microsoft the technology to track ads, and Drive Performance Media, which tracks the inventory for online ad opportunities.

"Post-Microsoft acquisition, the other two divisions, Atlas and Drive Performance Media have been really successful with Microsoft," said Jeff Lanctot, Razorfish chief strategy officer. "Razorfish was seen as valuable but the deal was made to get Atlas and Drive Performance Media; those remain within Microsoft."

Microsoft CEO Steve Ballmer said in a statement, "We are grateful for the contributions Razorfish has made to our online advertising business since joining the company as a part of the aQuantive acquisition in 2007, and are pleased that they have found a new long-term home with Publicis Groupe."

The company will be folded into Publicis' VivaKi group. Bob Lord will remain Razorfish CEO.

Razorfish will stay in Seattle. It has more than 2,000 employees in offices around the world.

"For us it allows us to expand our strategic plan much more quickly," Lanctot said about joining Publicis. "It allows us to expand not only globally but to have a much more significant global footprint; it also allows us to expand our services."

Publicis will pay Microsoft a combination of cash and 6.5 million shares of Publicis stock. The two will also enter into a five-year strategic agreement in which Microsoft will remain a client.

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com

Copyright © The Seattle Times Company

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