Media buying colossus Harold Mitchell has today announced the sale of his traditional media buying agency, Mitchell & Partners, for $100 million to his listed internet offshoot emitch.

However, after 30 years taking on and beating the global advertising giants more effectively than any other independent player anywhere, Harold Mitchell is remaining firmly in control of the combined operation by becoming executive chairman.

The deal was announced by emitch chairman and very busy Qantas director Gary Hounsell in Melbourne this morning, but the details are vague.

Harold will clearly get a substantial whack of cash but has promised to reinvest some of it to lift his family’s stake in emitch from 35% to 40%.

Emitch and Mitchell & Partners are both debt free but Hounsell said emitch would fund the acquisition through debt and a capital raising that would either comprise a private placement or a pro-rata rights issue. The details are still being worked out and shareholders will vote on the deal in February.

Remarkably, emitch shares were allowed to trade on despite this vagueness about the financials and they ranged wildly between $1.40 and $1.75 this morning. Harold had his biggest pay day when the stock was floated at $1 a share at the height of the dotcom boom and peaked at $3.75 before crashing to as low as 4c.

However, the second internet boom has seen emitch shares triple over the past year and in November it broke back through the magical $1 mark after a bullish AGM before hitting a high of $1.75 this morning.

Proof of the second internet bubble comes from the fact that emitch closed with a value of $289 million last night, even though it only billed $35 million in 2005-06. Mitchell & Partners is projected to make earnings before interest and tax of $11.56 million in 2006-07 but is being sold for just $100 million even though it handles $900 million in annual billings.

The combined business will book more than $1 billion of advertising in the 2007 calendar year and Harold will firmly entrench himself on the BRW Rich List provided he can extract enough cash and the emitch share price holds.

News Corp and the Seven Network are both small emitch shareholders and will also be hoping Harold hasn’t tried to extract too big a price. The stock was 7c lower at $1.48 by 12.30pm.