In a move some critics call a major overpayment, French advertising powerhouse Publicis announced Monday it will acquire marketing and consulting company Sapient for $3.7 billion US.
The all-cash transaction equals $25 per share.
In a press release [PDF], Maurice Lévy, Chairman and CEO of Publicis Groupe, said: “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. It will also give Publicis Groupe access to new markets and creating new revenue streams.”
He went on to say: “This acquisition fulfills many of Publicis Groupe’s objectives: we will enhance our leadership position in digital, achieve our goal of deriving 50% 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.”
Publicis has been known for being spend-happy, as TechCrunch notes. “Last year it earmarked $4 billion for acquisitions in order to cement its position within the digital marketing and communications space,” Jon Russell writes.
Some business columnists aren’t bullish on the acquisition. Quentin Webb writes Sapient isn’t the “killer app” that makes Publicis a must-buy stock, and the purchase seems like a pricey distraction amidst faltering performance by the ad giant.
Webb goes on to write: “[Publicis] keeps under-shooting guidance. There is still no answer on who will succeed veteran boss Maurice Levy. Performance in emerging markets is anaemic. And it is taking far longer than U.S. rival Omnicom to recover from the collapse of their planned merger back in May.”
Others view the acquisition as playing catch-up. “In trying to keep up with the rapid changes in how to get through to consumers in a digital age, rivals such as WPP PLC have expanded aggressively in new areas such as programmatic media buying, a system that allows for real-time bidding and selling of digital media space,” the Wall Street Journal writes.
Publicis noted that if the deal goes through it would create a new umbrella company called Publicis. The newly named Publicis.Sapient unit would then comprise core digital agencies: Sapient’s three business lines, plus Publicis’s Razorfish and DigitasLBi. The unit will be helmed by Sapient CEO Alan Herrick. The agencies will continue to run independently, Publicis said.