|Photo: Tom Stockill|
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That Sunday, Mr. Sorrell got in touch with 24/7 Real Media Chairman-CEO David Moore to broach an acquisition. By mid-May, Mr. Sorrell had a Real deal, agreeing to fork over $649 million cash for the web ad-services outfit. Mr. Sorrell might have been able to pay less; in the end, there was only one other bidder. Private equity took a pass.
New WPP and 24/7 securities filings show how buyer and seller played the game. They reveal that WPP and 24/7 last year discussed a "possible joint venture." WPP at the time did due diligence on 24/7, but the two didn't reach an agreement.
How the Real deal played out:
Feb. 27: 24/7's board and management meet with Lehman Brothers and discuss likely consolidation in the internet ad-services space. The board instructs Mr. Moore and Chief Financial Officer Jonathan Hsu to broach merger discussions with several key competitors. Stock value at time: $9.47.
March: A number of suitors approach 24/7. Management meets in person or by phone with four potential buyers. 24/7 officially hires Lehman to shop the company.
March-April: Lehman contacts 23 prospects -- 20 "strategic" firms (ad related or internet related) and three private-equity outfits. 24/7 signs confidentiality agreements with 13 companies including (on April 17) WPP. Between March 6 and April 23, Lehman and 24/7 meet with 10 strategic prospects and two private-equity ventures.
April 13: Google says it's buying DoubleClick, stunning the market with the $3.1 billion price tag.
April 15: Mr. Sorrell contacts 24/7. Mr. Moore tells him 24/7 has hired Lehman.
April 16: WPP's financial adviser, Goldman Sachs, and two other potential bidders contact Lehman. A fourth firm indicates interest in a deal other than a full acquisition.
April 19-20: Letters go out to six potential bidders, including WPP, informing them that final bids are due at 5 p.m. E.T. April 23.
April 20: In his quarterly results conference call with analysts, Mr. Sorrell discusses ramifications of the huge DoubleClick deal. "I think that the deck chairs are going to start moving around fairly quickly," he says. "I think the game changed on Friday night [April 13]."
April 23: 24/7 gets two bids. WPP offers $11.75 a share, cash. The second bidder, a potential strategic buyer, offers a lower price, half cash and half stock. Private equity doesn't bid.
April 25: Lehman tells 24/7's board that the lower bidder is unlikely to increase its bid to the level of WPP's offer. 24/7 tells WPP it is a finalist in the auction.
May 1: A newspaper report says WPP may buy 24/7 for more than $600 million. Mr. Sorrell declines to comment, telling a reporter: "It's not your business." 24/7 hits a multi-year high of $13 before pulling back to close at $11.97.
May 3: Messrs. Sorrell, Moore and Hsu and advisers discuss the deal over lunch.
May 9: 24/7 announces first-quarter results and reveals it has hired Lehman to assess "strategic alternatives."
May 16: WPP and 24/7 boards approve merger agreement. Stock closes at $11.26.
May 17: The two companies announce agreement for WPP to buy 24/7 for $11.75 a share. WPP's rich opening bid wins the game.