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Digitas Closes $160 Mil. Modem Purchase

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NEW YORK Digitas today completed its first acquisition in its 24-year history, the $160 million stock-for-stock purchase of Modem Media.

Starting with the open of the market on Monday, the combined company will be listed on the Nasdaq under the symbol DTAS, and Modem shares (MMPT) will cease to be traded.

The combined company will operate as a holding company of sorts: Digitas Inc. will be led by chairman and CEO David Kenny and will comprise two agency networks, Digitas and Modem.

Martin Reidy, who joined in January from R/GA as president of Digitas in San Francisco, will head up Modem. The interactive agency's London and San Francisco outposts are absorbing Digitas' clients and more than 100 staffers in those cities. After that, Norwalk, Conn.-based Modem will have about 400 employees worldwide, working for Home Depot and IBM, among other clients.

Laura Lang will continue to run Digitas as president. The 1,100-staffer digital- and direct-marketing shop has offices in Boston, Chicago and New York and handles accounts like American Express and General Motors.

Upon the close of the deal, Modem shareholders received 0.70 shares of Digitas common stock for each share of Modem common stock held immediately prior.

Since the merger was revealed in July, the deal has lost value. The purchase was originally estimated at $200 million based on the $9.83 closing price of Digitas' stock on July 14, the day before the merger was announced. Today, the acquisition is valued at $160 million, based on yesterday's close at $8.49.

Digitas shares closed today at $8.37, down 8 cents or nearly 1 percent. On its last day of trading, Modem's stock closed at $5.90, down 4 cents or 0.7 percent.