Global ad giant Publicis is spending big to position itself as the top agency for brands riding the digital wave, after it announced (PDF) a deal that sees it acquire Sapient for $3.7 billion.
Publicis is paying $25.00 per share in an all-cash transaction at a total valuation that is a 44% premium to Nasdaq-listed Sapient’s most recent share price, as of October 31. The deal, which is described as a merger, will see Sapient become a wholly-owned subsidiary of Publicis Groupe.
The deal has been approved by both companies’ boards, but remains subject to the usual regulatory approval and other red tape. Once complete, Publicis intends to create ‘Publicis.Sapient,’ a new venture that will unite Sapient’s three arms — SapientNitro, Sapient Global Markets, Sapient Government Services — with Publicis’ existing digital services — DigitasLBi, Razorfish Global and Rosetta — and focus on “digital transformation at the convergence of communication, marketing, commerce and technology.”
An official announcement explains that the additional of Sapient — which counts 13,000 staff across 37 global locations — will take the Publicis Groupe to combined annual revenue of more than €8 billion (approximately $10 billion), and over 75,000 employees worldwide. That, Maurice Lévy, Chairman and CEO of Publicis Groupe, said will make it the largest digital marketing and technology organization worldwide.
“Sapient is a ‘crown jewel,’ a one of a kind company born in the technology space with strengths in marketing, communications, consulting and omni-channel commerce, all of which are equally important to best help clients achieve their digital transformation,” Lévy gushed, adding that it will also expand the group into new markets, bring additional revenue streams, and consolidate expenditure.
Publicis has targeted 50% of its revenue from digital by 2018, and Lévy told a conference call that this objective would be reached as soon as the deal closes.
The group isn’t shy to spend when it believe it is called for, and last year it earmarked $4 billion for acquisitions in order to cement its position within the digital marketing and communications space.
Last summer, it picked up Chinese social media company Nettalk in an undisclosed deal, and other purchases in recent years have included LBi ($450 million), Rokkan ($575 million), Rosetta ($575 million), Razorfish ($530 million) and Digitas ($1.3 billion), as AdAge notes.
This time around, the scale of the Sapient acquisition is far larger and at a more critical time. That because six months ago Publicis and Omnicom — two giants in their field — called off a proposed $35 billion merger deal due to rumored political differences. The deal was largely thought to be a response to the growing power of the internet ad businesses of Google, Facebook and others who allow brands and companies to cut out traditional agencies and manage campaigns directly.