Google last night announced its biggest ever acquisition with the $3.1bn (£1.5bn) cash purchase of DoubleClick, a leading online advertising network, consolidating its grip on the internet ad market.

The Wall Street Journal reported last week that Microsoft was bidding for DoubleClick but pulled back after the auction price rose above $2bn. Yahoo and Time Warner's online unit were also said to have considered a bid.The deal comes six months after Google paid $1.65bn to acquire video-sharing site YouTube.

The DoubleClick acquisition promises to fortify Google, the juggernaut of search-based advertising on the web, as it expands into print, radio, video, mobile, and TV ad markets.

DoubleClick was founded in 1996 and offers a digital marketplace which connects advertising agencies, marketers, and web site publishers seeking to place online ads. It has more than 1,500 corporate clients. Its software can help customers track the effectiveness of their advertising, and it provides display ads for sites including MySpace and America Online.

The company was a dotcom stock market star and leading independent player in the first generation of online advertising during the 1990s, and has been majority-owned by San Francisco private equity firm Hellman & Friedman since 2005. It paid $1.1bn in stock and debt for its stake. JMI Management is a co-investor in the company.

New York-based DoubleClick was the most successful Internet start-up to emerge out of so-called Silicon Alley, the downtown Manhattan corridor that gave birth to dozens of start-ups which sought to move Madison Avenue advertising online.

The company hired investment bank Morgan Stanley in March to help explore its options, including a possible stock market listing. Hellman & Friedman set a price tag of at least $2bn, according to a Wall Street Journal report late last month.

Some analysts felt that Google paid a very steep price for DoubleClick, speculating the web search leader may have been willing to do so to keep it out of the hands of rivals. "This is an amazing outcome for DoubleClick," said Jordan Rohan, an analyst with RBC Capital Markets. He said DoubleClick was a strategic asset because it sits between advertisers and publishers, and has robust technology.

"Google could not let this go to Microsoft and therefore paid what they needed to pay," he said.

Google shares fell in after-hours trade.

Reuters