Report: Microsoft Looks to Shed Razorfish

Digital Agency Acquired as Part of AQuantive Deal

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NEW YORK ( -- When Microsoft acquired digital-ad agency Razorfish in its $6 billion dollar deal for aQuantive two years ago, it seemed only a matter of time until it looked to shed the shop, which didn't seem to fit the software giant's business model. That time may be here.

Microsoft has hired Morgan Stanley to advise it on selling the digital unit, according the Financial Times, which goes onto cite Publicis as a potential buyer. It quotes Publicis CEO Maurice Levy as suggesting there's a window right now in which it could raise money, although he doesn't specifically address Razorfish.

"Obviously if we can take advantage of the current situation to be ready to take these things, it's good," he told the paper. Any Publicis deal would boost the holding company's share of revenue from digital from its 2008 portion of 19%; already it has more than the Big Four holding company average of 16%. Digital services was one of the main growth drivers this past year for the giant ad holding companies.

Holding companies have circled the shop since the software giant purchased it and, in some cases, even explored whether certain assets could be -raded to achieve a sale. Last August, Ad Age reported WPP was exploring whether a deal could include its sending its 24/7 Real Media ad serving unit to Microsoft in exchange for Razorfish. One potential barrier was Microsoft's asking price for the agency.

Razorfish was one of three units Microsoft acquired with aQuantive; the other two are ad network DrivePM and ad-serving company Atlas. A year ago the price floated for Razorifsh hovered around $800 million. Today the FT reports it has likely dropped to $600 million.

Since Microsoft acquired it, the agency has shortened its name from Avenue A/Razorfish to simply Razorfish and expanded globally. It is now in 20 countries, although most of its revenue, as of 2007 came from the U.S., according to the Ad Age DataCenter's ranking of agencies. In 2008, DataCenter figures peg its domestic revenue as 317 million, up 6% from the year before.

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