Hellman & Friedman has dealt in the advertising space before. In 1996, the San Francisco-based buyout shop acquired a $200 million minority position in New York ad firm Young & Rubicam Inc., and in 1999 it acquired a control stake in online marketer Digitas Inc. for $100 million. The firm’s latest foray into the advertising space bares some resemblance to the Digitas deal-in that the target is Internet-based-but the transaction value certainly sets these two deals apart.
Late last month, H&F reached an agreement to acquire DoubleClick Inc. (NASDAQ: DCLK), a provider of marketing solutions, in an all-cash deal valued at approximately $1.1 billion. The purchase price breaks down to $8.50 per DoubleClick share-a 10.6% premium on the average trading price of stock for the 30 days prior to the transaction’s announcement. JMI Equity, a San Diego-based venture firm focused on the software and business services industries, will invest alongside H&F. The deal carries a $28 million break-up fee.
Headquartered in New York, DoubleClick earned $66.69 million of EBITDA during fiscal year 2004, according to an earnings report posted on its Website. The company provides solutions for marketers and Web publishers to plan, execute and analyze their online advertising programs in areas including search engine and email marketing.
Hellman & Friedman Capital Partners V LP and JMI Equity Fund V LP will be tapped to provide the approximated $342 million in equity financing for the deal, with H&F doing most of the heavy lifting. Bear Stearns & Co. Inc. has committed $290 million in senior first lien secured credit facilities and $115 million in senior second lien secured credit facilities.
H&F declined to comment for this article and messages left with JMI were not returned.
“Part of what makes this an attractive buy is that DoubleClick is actually two businesses. In one hand you have the technology division and in the other there is the data division. Both sectors are fast-growing, and the pace is expected to increase going forward,” a source close to the transaction told Buyouts.
According to a research note prepared by Morningstar Inc., about two-thirds of DoubleClick’s 2004 revenue and 57% of its operating profits came from the technology unit. The remaining revenue and operating profits are attributed to the data unit.
The deal, scheduled to close in the third quarter, has already been approved by DoubleClick’s board of directors, but is still contingent upon stockholder and regulatory approval. Upon the transaction’s close, the holders of DoubleClick’s existing $135 million of outstanding zero coupon subordinated notes, which are due in 2023, will have the right to require DoubleClick to repurchase the notes at par.
H&F has been a busy firm lately. In late April the firm announced it will provide financing for the NASDAQ’s acquisition of electronic trading network Instinet Group Inc. H&F already owns a minority stake in the NASDAQ. Earlier in April, the firm, along with Farallon Capital Management and GIC Special Investments, agreed to acquire Universal Underwriters Group from Zurich Financial Services Group for approximately $1.1 billion. Meanwhile, the firm is still putting the finishing touches on the $3.65 billion acquisition of Texas Genco with The Blackstone Group, Kohlberg Kravis Roberts & Co. and Texas Pacific Group.