French advertising and public relations company Publicis Groupe has signed a definitive agreement to acquire NASDAQ-listed digital marketing and consulting firm Sapient in an all-cash deal for $3.7 billion.
As part of the agreement, Publicis is paying Sapient $25 per share, which is 44% higher than Sapient’s closing stock price of $17.32 per share on October 31, 2014. The transaction is expected to close in Q1 2015. Interestingly however, Sapient shares shot up by 42% to $24.60 post this announcement.
Post acquisition, Sapient will become a wholly owned subsidiary of Publicis Groupe and the company’s shares will be delisted from NASDAQ.
Publicis mentions that it will be creating a new platform called “Publicis.Sapient” that will combine Sapient’s three divisions – SapientNitro, Sapient Global Markets and Sapient Government Services with Publicis Groupe’s existing divisions like DigitasLBi, Razorfish Global and Rosetta. This platform will focus on “digital transformation at the convergence of communication, marketing, commerce and technology”.
Publicis Groupe Chairman & CEO Maurice Lévy mentioned that this deal will also enable them to enter new markets, expand to new verticals and create new revenue streams.
India Operations: Publicis mentions that this deal will also provide them access to Sapient’s talent pool in India and enable them to make use of Sapient’s production infrastructure in India for digital production.
An Afaqs report suggests that around 8,500 people of Sapient’s 13,000-strong workforce are based in its three India offices in Bangalore, Mumbai and Gurgaon. They mainly provide back-end support and solutions to Sapient’s global clients as part of the Sapient Global Markets division.
Sapient’s digital marketing & consulting agency SapientNitro also has offices in Bangalore, Gurgaon and Noida and had recently roped in KV Sridhar as its chief creative officer. Interestingly, Sridhar was previously the chief creative officer of Publicis’s advertising agency network Leo Burnett (India & Subcontinent) for 17 years.
Omnicom deal: This acquisition comes at the back of Publicis Groupe and Omnicom Group calling off their $35 million merger in May this year, about 10 months after announcing the merger. The deal apparently fell through due to “difficulties in completing the transaction within a reasonable timeframe”.
Publicis Groupe’s India acquisitions
Publicis Groupe has somewhat been on an acquisition spree in India, having acquired around eight companies in the country since mid-2012. This includes:
– Delhi-based advertising and digital agency Law & Kenneth in February 2014.
– Mumbai-Based ad agency Beehive Communications in October 2013.
– Bangalore-based technology service provider Neev Technologies in April 2013.
– Mumbai-based digital marketing firm Convonix in March 2013.
– Digital media agencies iStrat and Marketgate in December 2012.
– Performance marketing firm Resultrix in August 2012.
– Digital marketing and web development agency Indigo Consulting in April 2012.
In 2010, Publicis had also acquired a majority stake in 20:20 Media, a public relations company, and 2020Social, a social media consulting company.