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Tradedoubler shareholders snub AOL's $900m bid

Has the world gone completely mad?

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AOL, which yesterday agreed to pay $900 million for Swedish company Tradedoubler.com is pledging to hold firm on the hefty sum, despite opposition from some shareholders of the acquisition target.

Swedish pension fund Alecta, which holds about 10.01 per cent of Tradedoubler shares, says it will reject the deal because the fee doesn't reflect the true value of the company, which matches Internet advertisers with media and ecommerce sites.

The price tag for Tradedoubler is about four times the company's revenue of the roughly $224m over the past four quarters. This is an 8.6 percent premium to Tradedoubler's Friday close on the Stockholm Stock Exchange and 20 per cent higher than its three-month moving average. AOL paid less than half that in 2004 to acquire Advertising.com, which the Time Warner unit wants to bolster with the new acquisition.

Shareholders representing about 20 per cent of Tradedoubler's shares have decided to take the money and run. Under terms of the agreement, owners representing 90 per cent of shares must approve the deal, leaving open the possibility that AOL may have to bid higher still to get the deal done.

With Alecta holding more than 10 per cent of Tradedoubler's holdings, the viability of the deal remains in doubt.

AOL nonetheless has an option to acquire a 20 per cent stake in the company. It needs to acquire at least 66 per cent to take control.

Tradedoubler's revenue has risen steadily, with sales in the most recently completed quarter increasing 54 per cent to about $61m. ®

The Register says:

Somehow, AOL has persuaded itself that Tradedoubler is a strategic purchase, worthy of top dollar. But Bubble 2.0 madness has clearly descended when it is the shareholders of Tradedoubler, and not of AOL, who are complaining about this deal. There is always a time to sell. And today is that time for a company of Tradedoubler's ilk.

In effect, Tradedoubler is little more than a online sales house, albeit a big online sales house. For such a business to sell for four times revenues is a remarkable achievement for Tradedoubler's board: shareholders should cut and run.

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