MOSCOW (Reuters) - Rambler Media, the British-registered owner of Russia’s Rambler Internet portal, said on Friday it has agreed to sell the Begun advertising agency to Google for $140 million (70.3 million pounds).
Rambler also signed an agreement with the world’s most popular search engine to use its search and contextual advertising technology on www.rambler.ru.
Under the deal, search queries made on Rambler’s home page and through Rambler Search function will be enhanced by Google, while Rambler will display Google ads alongside search results.
“This agreement illustrates our commitment to investing in Russia, where online advertising is currently experiencing rapid growth,” Mohammad Gawdat, Google’s managing director for emerging markets, said in a statement.
Rambler, which currently owns 50.1 percent of Begun, said in it would first buy the remaining 49.9 percent stake in Begun from Bannatyne Limited and then sell the entire firm to Google.
With $69.9 million of the $140 million being attributable to Bannatyne, affiliated with the Finam group of companies, Rambler expects to receive a net gain of around $50 million.
Rambler, the only listed Russian Internet firm, said it would use the proceeds from the sale to finance its investment programme and potential acquisitions.
The deal, seen closing in September, is expected to support margin improvement in future years, the company said, adding it maintained its earlier guidance for the full-year 2008.
Rambler expects revenue of between $100 million and $110 million and margin on the basis of earnings before interest, tax, depreciation and amortisation (EBITDA) of 20-25 percent.
That compares with revenues of $69.1 million, which included results of Begun, consolidated since August 2007, and an EBITDA margin of 11 percent in 2007.
Rambler sees the internet advertising in Russia growing at an annual 50 percent and expects the market size will exceed $1 billion in 2010 in terms of revenues.
Reporting by Maria Kiselyova; Editing by Paul Bolding