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The biggest Internet players have at least a passing interest in DoubleClick, an online advertising network that reaches hundreds of websites, and they could be willing to overpay for it for a variety of reasons.

Google Adds To DoubleClick Intrigue

When Google, Yahoo, Microsoft, and AOL sit down for a few hands of acquisition poker, the room probably looks a lot different than a converted basement with a couple of pilfered street signs and a burned-out neon Coors bar light hanging on the walls for decoration. We imagine slick playing cards, fine Single Malts, and professional dealers make up the setting.

We doubt we could afford the blue chips, especially with DoubleClick in the pot, and its private equity partners Hellman & Friedman wishing for a ten figure payoff. It could take $2 billion to win this hand, possibly more.

The stakes go up when the big players show an interest. In DoubleClick's case, Google joining the other players has pumped up the perceived value behind the company. The Wall Street Journal said Google's interest, cited by sources close to the talks, may have pushed Microsoft out of the bidding.

Though all four companies covet the reach DoubleClick has as a third-party advertising serving platform (DoubleClick boasts over 1,500 ad clients for its network), the premium price might not reflect the real value behind the firm. Ashkan Karbasfrooshan suggested that since part of DoubleClick has been sold off, the remaining company is not the one that merited its $1.1 billion purchase by private equity firm Hellman & Friedman in April 2005.

The players may have changed at the table already; none of them are talking about DoubleClick at the moment. Speculation holds that Microsoft won't pay $2 billion for the company. That could be unvarnished truth, or simply a step in the bidding process.

Karbasfrooshan made a stronger point about AOL's possible interest, and impact on a deal with any of the other three firms. If another firm wins DoubleClick, AOL would probably pull its business out instead of giving it to a competitor; they aren't about to let Microsoft or Yahoo profit at its expense.

He also raised, and dismissed, the possibility of AOL buying DoubleClick at the escalated price, even though they have made a similar purchase previously:

Of course, AOL could step in and buy it, as it bought Advertising.com for $435M, which today drives a lot of revenue for Time Warner’s online unit (ranking it on our Top 10 Web Acquisitions of All Time here). But, the fact remains, it’s one thing to buy an asset for $435M, it’s another to buy an asset for $2B.

Google and AOL have their financial futures intertwined to a degree, as AOL may still be driving ten percent of Google's revenue. Perhaps Google could buy DoubleClick to satisfy its need for a third-party ad firm, and offer AOL clients a discount for advertising through it if they are already AdWords clients.

That would really raise the stakes.