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ValueClick sparks interest after aQuantive takeover

Now that Microsoft Corp plans to buy online advertising company aQuantive Inc for US$6 billion, investors and analysts are wondering if competitor ValueClick Inc is a prime target for a takeover itself.

ValueClick, which some analysts see as the No. 4 player in the online advertising space, is the last man standing now that aQuantive and other sector majors have all been acquired in a matter of weeks.

On Thursday, advertising giant WPP Group PLC said it would purchase online advertising company 24/7 Real Media for US$649 million, and last month Google Inc said it would buy private online advertising firm DoubleClick Inc for US$3.1 billion. Yahoo said it agreed to purchase private online advertising exchange Right Media Inc for US$680 million the same month.

Some analysts think ValueClick is still on its own because buyers are most interested in gaining ad serving technology, which only makes up a small portion of the company's sales.

The technology helps companies place and manage their online advertising.

Still, analysts also think potential ValueClick buyers exist.

"Last one standing at the dance sounds like a negative," Global Crown Capital analyst Martin Pyykkonen said, but the flip side is that there's still a few potential buyers for the company.

With a competitive marketplace for the companies that have sold so far, ValueClick "should be attractive to somebody," Pyykkonen said.

Pyykkonen estimated the company could fetch as much as US$4 billion, based on a premium over his current US$33 price target for the company and the purchase prices of its peers. Microsoft's bid put an 85 percent premium on aQuantive, while WPP's offer set a 30 percent premium on 24/7. DoubleClick was privately held at the time of the Google offer.

But with so many major companies already acquiring its peers, the question is who might be left to buy ValueClick.

Eric Martinuzzi, an analyst with Craig-Hallum Capital, said that based on the recent purchases it would make "absolute sense" if a major marketing and advertising company like Omnicom Group Inc or Interpublic Group of Companies Inc bought ValueClick.

He also agreed News Corp and Advertising.com owner Time Warner Inc could be potential ValueClick suitors.

And despite its recently announced Right Media purchase, Yahoo might also benefit from "a more strategic relationship" with ValueClick, Martinuzzi said.

Not everybody thinks ValueClick is at the top of the buyout list.

Merriman Curhan Ford analyst Richard Fetyko pointed instead to Web marketing technology company Viewpoint Corp, saying its assets and technology make it a logical company to be purchased.

And ValueClick still has some problems, which analysts acknowledged. On Friday, the company said in a Securities and Exchange Commission filing that it is under investigation by the Federal Trade Commission concerning its lead-generating practices.

Piper Jaffray analyst Aaron Kessler said it's still hard to say how the investigation will impact ValueClick. Kessler thinks the company currently complies with lead-generating rules, and the question now is whether or not the FTC wants to clamp down on what types of practices are allowed.

Kessler and Pyykkonen don't think the investigation will staunch its chances of being acquired, but it could hurt the company.

"It could be an overhang on the stock, until there's more clarity," Kessler said.
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