AOL’s TradeDoubler bid rejected by Alecta

US Internet giant AOL has bid for Sweden-based online advertising company TradeDoubler, in a cash offer worth 6.332 billion kronor. But Alecta, the Swedish company's largest shareholder, has dismissed the bid as too low.

TradeDoubler, with operations across Europe, has made its name as one of the world’s largest providers of Internet advertising. The company was a pioneer of affiliate marketing, whereby advertisers pay media according to results.

AOL’s bid of 215 kronor per share values the company at 6.223 billion kronor, an offer that the company’s board unanimously recommended to shareholders, according to a statement from AOL.

Shareholders representing 20 percent of the shares in the company have already accepted the bid, and TradeDoubler’s board has recommended acceptance of the offer.

But pensions company Alecta, the largest shareholder in the Swedish company, has said the offer is too low. Alecta on Monday bought 683,300 shares, giving it just over 10 percent of votes and capital. As AOL’s bid is conditional upon it getting more than 90 percent of capital, this gives Alecta the power to block the deal.

“We consider that the bid of 215 kronor per share does not reflect the value and growth potential we predict for the future,” said Alecta’s Peter van Berlekom in a press release.

AMF Pension and AMF Pension Fondförvaltning have also increased their stakes in TradeDoubler. They now own a combined 5.17 percent of the company.

“From an industrial perspective it’s a really good match, with few overlapping operations, and I believe that AOL is a good buyer for TradeDoubler,” said Mats Bergström, analyst at Nordea.

But Bergström said he was not surprised by Alecta’s refusal of the bid.

“It makes commercial sense, but it is too low. It would not surprise me if more shareholders turn down the bid,” he said.

He said he believed that AOL would raise its bid.

The bid was formally made by Goldcup, an indirectly-owned subsidiary of AOL, which has now changed its name to AOLS Holdings. The bid represents a premium of 20 percent compared with the recent average TradeDoubler share price.

“After carefully evaluating the Offer and considering the future prospects of TradeDoubler, it is the Board’s assessment that the transaction is in the shareholders’ best interest,” said TradeDoubler chairman Kjell Duveblad in a statement.

The bid will remain on the table until 19th February.

Many analysts expect TradeDoubler to receive a higher bid. In opening trading in Stockholm the company’s share price rose to 220 kronor, five kronor over the price offered by AOL.