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After Publicis' Acquisition of Razorfish, Might ValueClick Be Next?

Publicis' $530 million acquisition of Razorfish raises a question for ValueClick, one of few publicly traded advertising providers: Is it next to be bought?

ValueClick's stock has experienced a slight runup in recent weeks, rising from below $10 to around $11. That came despite the company's lousy Q2 2009 -- revenues fell 18 percent; it's suffering disproportionately from client budget cuts. Perhaps, as this financial blogger points out, the company is cheap enough to be added on to one of the larger networks' offerings, or even Yahoo?

There's certainly reason to believe that ValueClick stock is relatively cheap right now. It's been bashed by analysts and there is plenty of risk in its business -- if the turnaround doesn't come til 2010, ValueClick will be depressed for a long time.

But there's another problem. Its market cap is currently about $946 million, and that may be larger than its value. Publicis got Razorfish for a multiple of 1.4 times revenues. Using that rough benchmark, we find that ValueClick's annual revenues in 2008 were $626 million, and this year will doubtless be even less. At ValueClick, 1.4 times revenues equals $876 million -- far beneath its current market cap. In other words, an acquirer would currently have to offer far above $11 to persuade shareholders to let ValueClick go, but the company's sales multiple says it isn't worth that.