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Dentsu In Talks To Buy Network18’s Stake In Webchutney

Japanese advertising agency Dentsu is in advanced talks to buy out digital advertising agency and consulting firm Webchutney, according to a report by The Economic Times. The report cites two officials with knowledge of the development and pegs the size of the deal between Rs 40 crore and Rs 60 crore, following which Network18 which owns a 70.06% stake in the company through its investment arm, Capital18, will exit. It also mentions that the promoters of Webchutney will continue to hold their stakes.

However, Sidharth Rao, CEO of the company, has responded to the report with a blog post saying that ‘it was an honor to be considered by the biggest agency networks in the world, and that it was too early for the company to take a decision & settle down.’ Capital18 has neither denied nor confirmed if it was exiting Webchutney.

The report also quotes Rohit Ohri, Dentsu India group’s executive chairman, who acknowledged that the company was looking to scale up its digital capabilities in India and was currently discussing various options.

Webchutney, had registered a profit of Rs 6.35 crore in the financial year 2011-2012, generating a revenue of Rs 21.55 crore. Note that Network18 holds 230,410 shares of Webchutney Studios, with a 70.06% stake in the company, through its investment arms – it owns 49.42% of the shareholding through Capital18 Limited, Mauritius and 20.64% through Capital18 Fincap Private Limited, with 230,410 equity shares. Webchutney’s clients include Airtel, Microsoft, Unilever, Marico, Titan, MasterCard, Barclays, Proctor & Gamble among others.

If the deal gets finalised, it would be Dentsu’s fist acquisition in digital, although Japanese advertising major, had acquired a 51% stake in Mumbai-based Indian advertising agency, Taproot India, earlier this year.

We’ve been hearing about this development for a while, but as we’ve always said you can never be sure until a deal is finalised. It’s worth mentioning that this year has witnessed a number of deals between International agencies and Indian digital agencies. Just a few days back,  Publicis Groupe, the French advertising and public relations company, had acquired two digital media agencies in India, iStrat and MarketGate. Media and digital communications group Aegis Group plc had entered into an agreement to acquire a digital performance marketing and search agency Communicate 2. The WPP group had acquired 51% in Hungama’s digital agency arm, via JWT Singapore. In August 2012, we had reported that Interpublic Group (IPG), an advertising network, might acquire Interactive Avenues (IA), a digital marketing agency.

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