SHANGHAI, Apr. 16 -- Google Inc, the world's most-popular Internet search engine, has agreed to buy DoubleClick Inc for US$3.1 billion in its biggest-ever acquisition, gaining software for creating and measuring Internet advertising campaigns.

The acquisition is a windfall for Hellman & Friedman, the San Francisco-based private-equity firm that bought DoubleClick for US$1.1 billion in 2005. Google will pay cash for New York-based DoubleClick, it said on Friday in a statement.

The acquisition extends Google's lead over Microsoft Corp and Yahoo! Inc in the US$28.8 billion online advertising market and reflects its ambition to be a stronger competitor in sales of so-called display ads. Companies such as MTV Networks and Sports Illustrated use DoubleClick's Dart program to place these ads on their Websites and monitor how many customers they reach.

"This was a hotly contested asset," Jordan Rohan, an analyst at RBC Capital Markets in New York, told Bloomberg News. "Clearly Google was willing to pay what it took to keep this away from Microsoft."

Shares drop

Shares of Mountain View, California-based Google fell US$3.19 to US$463.10 in extended Nasdaq Stock Market trading after the announcement. They dropped US$1.10 to US$466.29 in regular trading on Friday.

Shares of Yahoo and Microsoft were little changed.

Google, which expects the purchase to close this year, had US$11.2 billion in cash at the end of 2006. Google executives declined to give financial details or comment on the earnings impact of DoubleClick, whose headquarters are in the same building as Google's New York offices. The purchase eclipses the US$1.65 billion Google spent to buy video-sharing Website YouTube in November and was 50 percent more than Hellman & Friedman had wanted. A person close to the situation said the firm would seek about US$2 billion.

"The amount is mind-blowing," said Richard Fetyko, an analyst at Merriman, Curhan and Ford in New York. Fetyko follows DoubleClick rival AQuantive Inc. "There was very competitive bidding. Microsoft has deep pockets, but apparently everything has its limits."

Microsoft, the world's largest software maker, has developed its own search engine and ad software to tap growth in the market. Yahoo and Google, its larger competitors in online ads, have been more successful in winning customers because they have a greater share of the Internet-search market.

"Microsoft will continue to do deals if and where they make sense from a business and economic perspective," said Adam Sohn, a director in Microsoft's online services group.

The acquisition bolsters Google's efforts to expand beyond the plain-text ads it shows next to Internet search results, the majority of the company's revenue today. DoubleClick's display ads often include pictures or video.