Publicis to acquire Sapient in $3.7 bn in all-cash deal
In one of the biggest deals in the media and advertising space, French advertising agency Publicis Groupe will acquire US digital marketing firm Sapient in an all-cash deal worth $3.7 billion (approx Rs 22,500 crore).
‘Publicis Groupe and Sapient on Monday announced that they have entered into a definitive agreement under which Publicis Groupe will acquire Sapient in an all-cash transaction for $25 per share,’ Publicis Groupe said in a statement. The deal will create $10 billion advertising behemoth.
Sapient, which has operations in the Americas, Europe and Asia-Pacific, generated $1.35 billion revenue in FY 2014. Its clients consist of global 2000 companies.
Commenting on the deal, Publicis Groupe Chairman and CEO Maurice Levy said: ‘This acquisition fulfils many of Publicis Groupe’s objectives: we will enhance our leadership position in digital, achieve our goal of deriving 50 per cent 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.’
It will also give Publicis Groupe access to new markets and creating new revenue streams, he added.
Under the terms of the agreement, Publicis Groupe will acquire all of the outstanding shares of Sapient for $3.7 billion, or $25.00 per share, in cash. The development comes after Publicis called off a deal in May this year to merge with Omnicom Group Inc that would have resulted in the merged entity becoming world’s biggest advertising agency with $23 billion annual revenue.
Publicis’ purchase price represents a 44 per cent premium to Sapient’s closing stock price on 31 October, 2014 at NASDAQ, the last trading day prior to the announcement of the agreement. The agreement has been approved unanimously by the Management and Supervisory Boards of Publicis Groupe and the Board of Directors of Sapient, the company added. Sapient President, CEO and Co-Chairman Alan J Herrick said: ‘With Publicis Groupe, we have found a partner that accelerates the level of transformation we can drive into the marketplace.’
Publicis Groupe, present in 108 countries with an employee-strength of 63,000 professionals, said it expects to fund the purchase price with cash on hand and the proceeds of bank and/or capital market indebtedness, without issuing any new equity. ‘In connection with its entry into the agreement, Publicis Groupe has obtained a firm financing commitment from Citi,’ the company said, adding the transaction was expected to close in the first quarter of 2015.
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