sagged 12% Thursday after agreeing to acquire rival marketing firm
Boston-based Digitas said it would issue 0.7 shares for each share of Norwalk, Conn., Modem Media. The deal is valued at $200 million at Wednesday's closing prices, the company said. Modem Media shares rocketed 33% on the deal.
"The combination of Digitas and Modem Media brings together two innovators who share a passion for helping clients win," said Digitas CEO David Kenny. "As complementary pioneers who've been leaders in defining interactive and database marketing, together we offer an even stronger value proposition to our clients. By helping our clients lead and win, we'll do the same for our shareholders and employees."
Digitas also boosted its stock buyback program to $70 million from $20 million and posted solid second-quarter profit numbers.
For its second quarter ended June 30, earnings rose to $7.6 million, or 10 cents a share, from the year-ago $2.9 million, or a nickel a share. Revenue rose to $96 million from $72 million a year earlier.
Those figures were in line with Wall Street estimates, but the company's third-quarter guidance -- adjusted cash earnings of around a dime a share on revenue of around $60 million -- skewed toward the low end of targets.
For its part, Modem Media posted second-quarter earnings of $1.8 million, or 6 cents a share, flat with the year-ago $1.7 million, or 6 cents a share. Revenue rose to $15.9 million from the year-earlier $15.3 million.
Early Thursday, Digitas slipped $1.26 to $8.57. Modem Media surged $1.39 to $5.69.