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Equity Firm to Buy DoubleClick for $1.1B

UPDATED: Private equity firm Hellman & Friedman LLC has agreed to acquire online advertising giant DoubleClick for $1.1 billion in cash.

JMI Equity, a San Diego-based venture capital firm that pumps money into the software and business service sectors, will join Hellman & Friedman in the deal.

Should the deal close in the third quarter as both parties expect, DoubleClick CEO Kevin Ryan will step down to pursue other opportunities. President David Rosenblatt will continue to oversee the TechSolutions division as its CEO, with Brian Rainey continuing to helm the DataSolutions division as CEO.

A new board of directors and chairman will be appointed post closing.

Ryan said on a conference call the deal is the culmination of DoubleClick's search to create "better value for shareholders." He allowed that he and the board of directors had discussed selling off all or parts of DoubleClick to equity firms and technology partners since last October.

"We think this is the best step we could have taken," Ryan said. "We think that DoubleClick is going to enter a new phase here and it's going to be a great one."

While Ryan said he could not comment on any restructuring of DoubleClick pursuant to the acquisition, he assured the public that the company's product roadmap would soldier on intact.

Hellman & Friedman is no stranger to advertising and marketing businesses. The San Francisco firm, which has raised more than $8 billion and invested in some 50 companies, helped BigShot Media and Young & Rubicam ratchet up their businesses.

DoubleClick was no slouch either. In the late 1990s, the New York-based outfit epitomized the glamour of the online advertising and marketing segment, helping to place ads on Web sites for a profit.

The concern grew, expanding its offerings to include a number of marketing targets, including search engines, affiliates, e-mail, database and marketing resource management. The company also builds marketing analytics tools to help clients measure channel performance.

Rivals 24/7 Real Media, L/90, Engage and ValueClick caught on to the promise of riches and quickly moved in on the New York-based company's turf, making it harder for DoubleClick to thrive.

Techniques to sell ads for Web sites have also changed. For example, search engine juggernaut Google today launched a limited beta test that will let advertisers choose on which sites their contextually targeted ads appear.

Google made this play to attract more branding-oriented advertisers and it is likely to jolt the competition in the advertising space because advertisers have desired such a feature. It also represents a business departure: In the past, media sellers have said site targeting would be technically difficult to implement.

DoubleClick stockholders will receive $8.50 in cash for each share of DoubleClick stock, good for a 10.6 percent premium over the average closing price of DoubleClick's stock for the last month.