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DoubleClick to Acquire NetCreations in $191M Stock Deal

In a move that rescues troubled NetCreations and adds to DoubleClick's e-mail marketing capabilities, the online advertising giant has agreed to buy the opt-in list broker and manager in an all-stock deal valued at $191 million.

Under the terms of the deal, DoubleClick will pay .41 shares of its common stock for each share of NetCreations' stock, which represents a $12.15 share price -- a 17 percent premium over NetCreations' 10-day average stock price. Both NetCreations and DoubleClick were down in morning trading, with the e-mail company sinking $0.48 to $10.89, and the ad giant dropping $2.12 to $27.5. The acquisition is expected to close in the fourth quarter.

The deal makes sense for both parties. For NetCreations it represents a big payoff, access to a sales force, and a rescue from the troubled waters in which it's been swimming. For DoubleClick, the acquisition gives it much-needed credibility in the e-mail marketing arena, as well as the income from a profitable division, which will presumably help it speed its path to profitability. NetCreations' founder and chief executive officer, Rosalind Resnick, will take the role of vice president of corporate development, e-mail. In addition, she will work with DoubleClick's Privacy Advisory Board.

NetCreations has lately been struggling in the public markets, its stock having dropped dramatically from its 52-week high of $69.75 on news of staff shakeups and a recent earnings warning. Back in June, president and chief operating officer Mitchell York quietly stepped aside into a director's position after only six months on the job. His departure was followed by the August resignation of chief financial officer Gary Sindler.

Still, the company has been profitable -- it recently announced it expected a 4 cent to 6 cent a share profit in the third quarter. That was less than what Wall Street expected, though. NetCreations attributed its troubles to the widespread slowdown in online advertising and marketing spending. In announcing the acquisition, DoubleClick executives said they believe there is more dough to be wrung out of NetCreations' e-mail lists, and touted the larger company's sizeable sales force and international presence as advantages.

"I think they were actually leaving a little money on the table," said Jeff Epstein, executive vice president of DoubleClick.

For DoubleClick, this beefs up its capabilities in an area in which it has been perceived as weak. The company only really began making inroads in the e-mail marketing arena when it acquired Opt-in Email.com in December 1999. Rival 24/7 Media, which has focused intensely on its e-mail marketing division and recently acquired Exactis, is widely thought to be the leader in this direct-marketing business.

"NetCreations has relationships with a lot of direct marketers which we were just beginning to develop," said Wenda Harris Millard, executive vice president and general manager of media at DoubleClick.

As a result of the deal, DoubleClick will now offer both opt-in and double-opt-in e-mail lists. The double-opt-in method of collecting e-mail addresses has long been a cause championed by NetCreations, which says it results in higher-quality lists and better respects consumers' privacy. The companies say NetCreations' Resnick will approach all of DoubleClick's existing e-mail clients and attempt to win them over to the double-opt in method, but those who decline will still be serviced with single-opt in.

When the two combine their respective resources, they will have 22 million e-mail addresses, with NetCreations contribution the lion's share at 15 million. NetCreations also brings to the table its client list. The company manages opt-in e-mail lists exclusively for more than 350 third-party Web sites including CNET, About.com, Network Solutions, CBS SportsLine, FortuneCity.com