Under terms of the deal announced today, Razorfish will issue 446,080 shares of common stock and make a cash payment of approximately $1.4 million. In today's early going, Razorfish's shares were trading at $16.06, up slightly from last night's $15.93 close.

The Munich-based Medialab sells Web design services in the European market. Its 55 employees will be absorbed into Razorfish's payroll under a new company to be called Razorfish Munich. Razorfish has two other locations in Germany: Hamburg and Frankfurt.

Adam Lichstein, Razorfish's New York managing director, said the acquisition gives the company a leg up in a tough yet lucrative German market.

"We think it gives us an immediate presence in Munich, which is a key market in Germany. It made a lot of sense to do this to jumpstart our growth in Munich and complement our growth in Germany," Lichstein told atNewYork this morning. He refused comment on Medialab's financial position.

Razorfish, headquartered in New York City, has offices in Amsterdam, Boston, Frankfurt, Hamburg, Helsinki, Los Angeles, London, Milan, Munich, New York, Oslo, San Francisco, San Jose, Stockholm, and Tokyo. It employs more than 2,000 people worldwide.