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What: Advertising company Publicis Groupe is acquiring Sapient, a digital agency and communications company, for US $3.7 billion in an all-cash transaction. Publicis is also creating Publicis.Sapient, a new organization that will house all of Publicis’ digital and technology-focused assets including Razorfish, Rosetta and DigitasLBIs.
Why it matters: Sapient will help Publicis go deeper into digital offerings and online activities, and bounce back from its failed attempt to merge with Omnicom Group Inc. The acquisition fullfils Publicis’ goal of deriving 50% of its revenues from digital marketing and technology services. Publicis recently announced a 20% investment in performance marketing firm Matomy. Sapient owns Hispanic and Latam ad shop La Comu.

descarga (1)After a failed attempt to merge with rival Omnicom Group Inc., advertising company Publicis Groupe will acquire Sapient, a digital agency and communications company, for US $3.7 billion in an all-cash transaction . This is Publicis’s second acquisition in less than a month after acqacquiring programmatic platform RUN and and taking a 20% position in performance marketing company Matomy Media.

Both companies’ boards have approved the offer  and Alan Herrick , CEO of Sapient, will become CEO of the new Publicis.Sapient  that will house all of Publicis’ digital and technology-focused assets — including Razorfish, Rosetta and DigitasLBI — and be focused exclusively on digital transformation.This is the first time also, that all Publicis’s digital assets and digital agencies are line up under a whole unit.

Sapient stockholders will receive US $25 in cash for each share. Publicis is paying 19.2 times Sapient’s earnings before interest, taxes, depreciation and amortization. That compares with a multiple of 14.5 times for similar targets over the past five years, according to Bloomberg.

“This deal dramatically changes the profile of our group. We will get access to new revenue streams and markets. We’ve been investing for many years in digital capabilities for one simple reason: it’s the future,” Publicis CEO Maurice Levy said.

Publicis will finance the purchase with cash and borrowings, without selling shares as the company received a firm financing commitment from Citigroup Inc. The transaction is expected to be completed in the first quarter of 2015.

A shift in Strategy

Publicis is pushing the company deeper into digital offerings following a shares decline of 17% this year. Sapient, owner of SapientNitro, a leading digital advertising agency, would push Publicis further into online activities. Publicis will add nearly 13,000 Sapient people to its existing staff of 62,000, and many of them are experts in everything digital, including designing websites, coding and analyzing data to better target ads to consumers.

Through its Global Markets division, which serves industries such as banking, energy and finance, Sapient has an existing consulting practice that may extend to other categories and provide advisory services around marketing technology and strategy. Publicis is shifting the majority of its digital activities to the newly created Publicis.Sapient, including DigitasLBI, Razorfish and Rosetta.SapientNitro’s biggest clients includes Unilever, Vail Resorts, and Queensland Tourism. Sapient employs about 13,000, and its 2013 gross revenues were US $1.3 billion. Net profits were about US $77 million. As of 2013, about 70% of its business came from its digital agency, SapientNitro. Another 25% was attributed  to Sapient Global Markets, serving the capital and commodity market needs of clients in the financial and energy industries.

It will also give Publicis Groupe access to new markets and creating new revenue streams. This acquisition fulfills many of Publicis Groupe’s objectives

“Sapient is a ‘crown jewel,’ that will  give Publicis Groupe access to new markets and creating new revenue streams. This acquisition fulfills many of Publicis Groupe’s objectives: we will enhance our leadership position in digital, achieve our goal of deriving 50% of our revenues from digital and technology three years ahead of our 2018 plan, and leverage technology, consulting capabilities to expand in new verticals, and offering new and exciting opportunities to our talents,” Levy said in a statement this morning.

“What we will do over time is expand the vertical consulting presence within Publicis.Sapient in order to cross-pollinate, in order to feed the other pieces of Publicis.Sapient and have deep expertise in vertical segments in which we operate to help clients construct solutions to take advantage of opportunities. You’ll see us both deepen as well as expand the types of consulting we do,” said Sapient CEO Alan Herrick.

 

What: Publicis Groupe and Omnicom Group have decided to called off a US $35 billion “merger of equals, ”  that would have created the largest marketing and advertising agency holding company in the world.
Why it matters:Agencies called for a 50-50 ownership split of the equity in the new company.No termination fee will be paid as a result of the cancelled deal.

poPublicis Groupe and Omnicom Group have called off their US $35 billion “merger of equals, “  deal only nine months after having made the official announcement .

Both agencies alleged the reasons were mainly due to  “the difficulties in completing the transaction within a reasonable timeframe,” according to a Omnicom´s  statement. However, the issues ranged from complex tax structure to the firms’ opposing cultures , leading to difficulties on taking decisions about the executive team and which company would officially acquire the other. Agencies were also losing major work – more than US $1.5 billion in the past month alone – and apparently high-profile clients including Microsoft, Vodafone and Danone.

If the deal had gone forward, it would have created the largest marketing and advertising agency holding company in the world.It would have even casted a shadow on Dentsu Inc.’s US $4.9 billion acquisition of Aegis Group in March 2013 and WPP’s US $4.7 billion purchase of Young & Rubicam in 2000.
 

According to a statement , no termination fees will have to be pay by either party. A US $500 million termination fee would have applied if either company had walked away unilaterally, but this is not the case. As the process dragged on, however, there will be furthers costs. Not to mention, the money Omnicom has already invested (more than US $48 million) on pre-tax expenses into merger preparations so far, according to filings.

The merger was unanimously approved by the management board and the supervisory board of Publicis Groupe and the board of directors at Omnicom. Both agencies called for a 50-50 ownership split of the equity in the new company, Publicis Omnicom Group.

jm“I want to emphasize that while the proposed merger was time-consuming, we never took our eye off the ball in terms of what we needed to deliver for our clients, our people and our shareholders,” Publicis Chief Executive John Wren (photo:right) said in a statement from Omnicom. “And that has been reflected in our reported results. We’re bullish on 2014,”he added.

“The decision to discontinue the process was neither pleasant nor an easy one to make, but it was a necessary one,” co-CEO Maurice Levy (photo:left) said in a statement from Publicis. “Prolonging the situation could have led to the diversion of the Group’s management from its principle function: to best serve our clients.”

Domino effect

Some time after word leaked out that the deal was called off, Omnicom shares fell US $1.80, or 2.7%, to US $64.40 in after-hours trading, pushing the stock below the price where it traded before the merger was announced last July (US $65.11). WPP and Interpublic Group of Cos. shares, both rivals to Publicis and Omnicom, consequently climbed 8.7% and 10.0%, respectively.

The companies had initially assured the deal could be completed as soon as the end of 2013. But the two sides were never even able to file certain required securities filings.

“That the deal broke off is by now not much of a surprise, but to the extent that it fell apart because the management teams did not agree on sufficiently clear organizational structure or key management appointments ahead of time, this is in retrospect surprising that appropriate pre-merger planning was never completed,” said Pivotal Research Analyst Brian Wieser.

Source: Adage

Publicis Group and Omnicom have agreed to merge and the combined company is expected to be called Publicis Omnicom Groupe. Consolidation of advertising agencies is being driven by growth opportunities in emerging markets such as Latin America (particularly Brazil) Russia, India and China to offset weak growth elsewhere. “Particularly in a fast growth region like Latin America, the merger brings unparalleled depth of resources to advance our client needs and opens enormous possibilities for our talent”, Julián Porras, CEO Latin America, Omnicom Media Group, tells Portada.

Publicis Omnicom Groupe Publicis Group and Omnicom have agreed to merge and the combined company is expected to be called Publicis Omnicom Groupe. On Sunday, New York based-Omnicom Group and Paris-based Publicis Groupe announced they would combine in a “merger of equals” that has a market cap of $35 billion. The company will be called Publicis Omnicom Group and be led by Omnicom CEO John Wren and Publicis CEO Maurice Levy.  They will be co-chief executives.

Particularly in a fast growth region like Latin America, the merger brings unparalleled depth of resources to advance our client needs and opens enormous possibilities for our talent.

Consolidation of advertising agencies  is being driven by growth opportunities in emerging markets such as  Latin America (particularly Brazil) Russia, India and China  to offset weak growth elsewhere. “Particularly in a fast growth region like Latin America, the merger brings unparalleled depth of resources to advance our client needs and opens enormous possibilities for our talent”,
Julián Porras, CEO Latin America, Omnicom Media Group, tells Portada.

Porras adds that ” I believe it will help us get to the future faster and provide scalable solutions with more speed, while protecting at all times client confidentiality through separation.  We will of course remain respectful of the essence and positioning of our Agency Brands.  This is a win for our clients and employees.”

The merger brings together well-known ad firms such as Omnicom’s BBDO Worldwide, TBWA Worldwide and DDB Worldwide with Publicis’ Saatchi & Saatchi and Leo Burnett. The new company will have more than 130,000 employees. The deal could close as soon as the fourth quarter, Publicis and Omnicom said in a joint statement. The combined company is expected to be listed on the New York Stock Exchange and Euronext Paris under the symbol OMC. Revenue for both firms was $22.7 billion in 2012.

Publicis Omnicom Group have some of the world’s largest advertising clients including, Johnson & Johnson, Mars, McDonald’s, Pfizer, Procter & Gamble. Potential for conflicts could arise between the new holdings Advertising Agencies  for clients including Pepsi and Coca-Cola, AT&T, Sprint, T-Mobile and Verizon.

“For many years, we have had great respect for one another as well as for the companies we each lead,” said Messrs. Levy and Wren. “This respect has grown in the past few months as we have worked to make this combination a reality. We look forward to co-leading the combined company and are excited about what our people can achieve together for our clients and our shareholders.”

Efficiency Gains

The merged holding is also aiming for US$500 million in savings due to efficiency gains.  To achieve this savings the companies are likely going to require consolidation of real estate, companies and possible headcount elimination. In their Sunday conference call the Publicis and  Omnicom Group CEO’s declined to explain how those cost-savings will be achieved.

The “Big Four” Global Advertising Holdings (WPP, Publicis, Omnicom and IPG) are turning into the  “Big Three”. Publicis Group and Omnicom have agreed to merge and the combined company is  expected to be called Publicis Omnicom Groupe.
On Sunday, New York based-Omnicom Group and Paris-based Publicis Groupe announced they would combine in a “merger of equals” that has a market cap of $35 billion. The company will be called Publicis Omnicom Group and be led by Omnicom CEO John Wren and Publicis CEO Maurice Levy. They will be co-chief executives. The merger brings together well-known ad firms such as Omnicom’s BBDO Worldwide, TBWA Worldwide and DDB Worldwide with Publicis’ Saatchi & Saatchi and Leo Burnett. The new company will have more than 130,000 employees. The deal could close as soon as the fourth quarter, Publicis and Omnicom said in a joint statement. The combined company is expected to be listed on the New York Stock Exchange and Euronext Paris under the symbol OMC. Revenue for both firms was $22.7 billion in 2012.

Publicis Omnicom Group have some of the world’s largest advertising clients including, Johnson & Johnson, Mars, McDonald’s, Pfizer, Procter & Gamble. Potential for conflicts could arise between the new holdings Advertising Agencies  for clients including Pepsi and Coca-Cola, AT&T, Sprint, T-Mobile and Verizon.

“For many years, we have had great respect for one another as well as for the companies we each lead,” said Messrs. Levy and Wren. “This respect has grown in the past few months as we have worked to make this combination a reality. We look forward to co-leading the combined company and are excited about what our people can achieve together for our clients and our shareholders.”

Growth Opportunities in Emerging Markets and Efficiency Gains

Advertising agencies are feeling the pinch in the US and Europe, where conditions are flat. Consolidation is being driven by growth opportunities in emerging markets such as Brazil, Russia, India and China and Latin America to offset weak growth elsewhere.
The merged holding is also aiming for US$500 million in savings due to efficiency gains.  To achieve this savings the companies are likely going to require consolidation of real estate, companies and possible headcount elimination. In their Sunday conference call the Publicis and  Omnicom Group CEO’s declined to explain how those cost-savings will be achieved.

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Starcom, media buying and planning agency part of Publicis Groupe, the world’s third-biggest advertising company, will work with Twitter Inc. on how to make money out of the micro-blogging service’s audience, Chief Executive Officer Maurice Levy said in Bloomberg today.

Twitter and Starcom MediaVest Group have reached a multi-hundred-million-dollar deal for advertising on the social network, the Financial Times reports. The deal is for “special access” to advertising slots, as well as research data and new, as-yet-unannounced advertising products, in return for which Starcom has committed to spend $200 million — or more — of its clients’ money. Full financial details were not released.

Publicis’s Starcom MediaVest Group “will find the way to monetize their audience,” Levy added in an interview on Bloomberg Television . “This could be pop- ups, this could be video, this could be new formats so we are working very hard with Twitter to find the right way to commercialize their space.” Levy also stated:

The deal with Twitter may involve spending between four to six hundred million dollars over a period of three, four years.

The company has been experimenting, testing, and learning on Twitter for a year and a half, Starcom CEO Laura Desmond said. Which means that it believes Twitter ads are driving real, measurable ROI for its clients. Lisa Weinstein, president of global digital, data and analytics at SMG, likened the deal to the practice of buying television inventory in advance.

The deal is not tied to specific SMG clients. Rather, SMG guaranteed that its Starcom, Mediavest and Spark agencies will spend a certain amount on Twitter ad inventory and other projects over a certain number of years—with that inventory being available to all clients across SMG. In exchange, SMG is expects to get better access to Twitter research, like analyses of tweets around TV shows from the tech platform’s recent acquisition of Bluefin Labs.

The deal also calls for Twitter and SMG to work together on new products, like custom surveys querying Twitter users on mobile devices.

twitterStarcom, the media buying and planning agency part of Publicis Groupe, the world’s third-biggest advertising company, will work with Twitter Inc. on how to make money out of the micro-blogging service’s audience, Starcom’s CEO  Maurice Levy told Bloomberg.

Twitter and Starcom MediaVest Group have reached a multi-hundred-million-dollar deal for advertising on the social network, the Financial Times reports. The deal is for “special access” to advertising slots, as well as research data and new, as-yet-unannounced advertising products, in return for which Starcom has committed to spend $200 million — or more — of its clients’ money. Full financial details were not released.

Publicis’s Starcom MediaVest Group “will find the way to monetize their audience,” Levy added in an interview on Bloomberg Television . “This could be pop- ups, this could be video, this could be new formats so we are working very hard with Twitter to find the right way to commercialize their space.” Levy also stated:

The deal with Twitter may involve spending between four to six hundred million dollars over a period of three, four years.

The company has been experimenting, testing, and learning on Twitter for a year and a half, Starcom CEO Laura Desmond said. Which means that Starcom believes Twitter ads are driving real, measurable ROI for its clients. Lisa Weinstein, president of global digital, data and analytics at SMG, likened the deal to the practice of buying television inventory in advance.

The deal is not tied to specific SMG clients. Rather, SMG guaranteed that its Starcom, Mediavest and Spark agencies will spend a certain amount on Twitter ad inventory and other projects over a certain number of years—with that inventory being available to all clients across SMG. In exchange, SMG is expects to get better access to Twitter research, like analyses of tweets around TV shows from the tech platform’s recent acquisition of Bluefin Labs.

The deal also calls for Twitter and SMG to work together on new products, like custom surveys querying Twitter users on mobile devices.

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