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Takes 15% Stake in Buyer AdLink

By Published on .

CHICAGO (AdAge.com) -- Online ad sales and technology giant DoubleClick signed a deal to sell its European media services business -- its least profitable unit -- to rival AdLink Internet Media for $27 million in cash in an effort to keep the company on track for profitability in 2002.

"European media was providing about 3% of our gross profit dollars and represented 100% of our losses," said DoubleClick CEO Kevin Ryan in an interview.

Takes stake in AdLink
The deal, which combines the two leading third-party Internet ad sales companies in Europe, gives DoubleClick a 15% stake in AdLink with the option to acquire another 21% based on performance. The deal also makes DoubleClick the exclusive provider of ad-serving technology to AdLink for the next 10 years.

"I'd always rather have a smaller piece of a bigger, more successful company," Mr. Ryan said. "For us it's a win, win, win."

The unit's sale

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comes amid speculation about the viability of the company's U.S. media operations.

In a Nov. 7 report, Lanny Baker, an analyst at Salomon Smith Barney, attributed the rise in DoubleClick's stock price over the last couple of weeks to a rumored media unit sell-off.

"What we've communicated is that all of our businesses need to be profitable next year," Mr. Ryan said, adding that if the U.S. media business is not on track, DoubleClick will consider a spin-off or merger.

"We'll probably make that call by the end of the year," he said.

Stephane Cordier, previously vice president of international media at DoubleClick, will become AdLink's chief operating officer.

Sale was imminent
Last week, DoubleClick's president of global media, Barry Salzman resigned, knowing the sale of the European division was imminent.

"[Mr. Salzman] was a big part of putting this strategy together, and it ultimately means that the remaining U.S. ad sales business is significantly smaller, so there's just not as big of a position available," Mr. Ryan said. "It really didn't make sense for [him] to stay."

Jeffrey Silverman will continue as vice president and general manager of the company's U.S. media unit, which is down to 70 staffers from 300 last year.

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