Publicis acquired Sapient for 3.7 billion USD

Noam Stiekema

The French advertising agency Publicis acquired Sapient for 3.7 billion USD. The deal for the US-based digital advertising company will be paid in cash, as Publicis wants to accelerate growth after experiencing unsuccessful merger earlier this year. Publicis expects rapid growth of the Internet advertising industry, especially in North America, which seriously surpassed that of […]

Publicis CEO

Publicis CEOThe French advertising agency Publicis acquired Sapient for 3.7 billion USD. The deal for the US-based digital advertising company will be paid in cash, as Publicis wants to accelerate growth after experiencing unsuccessful merger earlier this year. Publicis expects rapid growth of the Internet advertising industry, especially in North America, which seriously surpassed that of Europe, to help her keep up with its competitors, such as WPP and Interpublic. The CEO of Publicis Maurice Levy attributed the poor performance of the company of the failed merger with the second largest advertising agency in the world Omnicom, announced in August 2013 and left in May this year.

Some analysts, however, the price of 25 USD per share (44% premium) that Publicis is ready to pay Sapient, is too high for a company whose growth has already peaked. The deal largely kills hopes of shareholders to receive cash in the near future.

Maurice Levy defended the decision to purchase, saying the company will also acquire a greater value in the long run than if you redeem your shares. He promised to inform investors of its intentions in respect of dividends and redemptions in November. “This transaction will create the basis for accelerating the growth of Publicis providing access to new markets and revenue”, said Levy.

Publicis said the deal will be financed with cash and new debt and will not affect the credit rating of the company. Agency does not state when the acquisition will begin to affect the company’s profit but forecast annual cost savings of 50 million EUR. The revenue from sales of Sapient rose 14.1% to 1.1 billion EUR last year, with many surpassing sales growth of 1.2% of Publicis, although the French company reported a higher profit margin.

The management and the Supervisory Board of Publicis unanimously backed the deal, what he has done and the Board of Sapient, which will recommend to the shareholders to put their papers at auction. As a result, Sapient will be removed from the records of the US OTC market Nasdaq.

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