Update: It was announced officially seconds ago. Details below.

So as I first tweeted late last night, the Razorfish bidding war is over, and the winner is, as expected, Publicis. The price, around $600 million$530 million, and even though this isn’t the highest bid parent Microsoft (NSDQ: MSFT) got, it went with it because the other major component in the deal is an ad buy by the French agency. The other bidders in the race included WPP, Dentsu, Omnicom and three others. Morgan Stanley was the banker on MSFT’s side, while Blackstone advised Publicis on the deal.

Even though Japanese ad agency Dentsu’s bid was higher (around $700 million), Microsoft decided to go with Publicis because of the other part of the deal: the agency, which has clients such as Coca-Cola. HP, GM and Fidelity, will be buying many hundred millions in ads across MSFT search engine Bing and MSN, among other properties.

Deal’s official details and notes from conference call (via Bloomberg):
—Price is $530 million, in a combination of cash and 6.5 million Publicis Groupe treasury shares. expected to close Q3.
—Cash part of the price will be determined based on average Publicis share value in a 20-trading-day period ending on the eighth business day prior to the closing date of the transaction (typical French complexity).
—Based on current share prices, about 55 percent of deal would be in cash, and rest in shares. After the deal clsoes, MSFT will own about 3 percent of Publicis
—In 2008, Razorfish had revenue of about $380 million. Levy said. “We are paying between 1.4 and 1.5 times sales, which in the digital world is reasonable.”
—MSFT and Publicis have signed a “Strategic Alliance Agreement”, where Publicis clients will purchase display and search (Bing) ads from Microsoft over the five-year term of the agreement, “on favorable terms”.
—Razorfish will continue to be a “preferred provider” to Microsoft for digital marketing services, and contains a commitment by Microsoft to spend a minimum amount for these services each year.
—Levy on call: “There is no more big-scale acquisition left to make in digital, Razorfish was the last one. And there aren’t any in emerging markets. Thus one shouldn’t expect Publicis to make further large acquisitions in the short or medium-term.”—- Levy: “When we complete this transaction, approximately a quarter of our annual revenues will come from digital communications.”
—In H109, Publicis’ digital activities still grew 5.7 percent on an organic basis, versus a 6.6 percent overall decline.
—Razorfish will continue to operate under its brand name and be organizationally part of VivaKi, the new Publicis media entity created in June 2008 which includes Digitas, Starcom MediaVest Group, Denuo, and ZenithOptimedia.
—Deal expands on the MSFT-Publicis deal done in June to work together on TV ads.
—Razorfish’s management team, led by CEO Bob Lord, will remain unchanged.

This is Publicis’s second-biggest digital acquisition, following its Digitas’ $1.3 billion acquisitions in late 2006. It has bought a number of smaller international digital agencies since then, including Performics, Interactif and Tribal

For Microsoft, this ends its year-long quest to sell off the digital ad agency that it never wanted, as part of its $6 billion acquisition of Aquantive in August 2007. Seattle-based Razorfish employs about 2,000, and has done employee layoffs in the last 6 months including an announced 80 job cuts in December. Likely there will be lot more layoffs and the agency gets integrated within the Publicis machinery.

• Microsoft Steps Up Talks With Potential Razorfish Buyers
• Inside The Tug Of War For—And Within—Razorfish
• If Microsoft Sells Razorfish, Publicis Would Provide The Best Fit
• Microsoft To Sell Razorfish; Publicis Groupe Possible Bidder