French advertising holding group, Publicis Groupe, has acquired digital firm Sapient at a steep cost of USD 3.7 billion. The acquisition has come months after Publicis fall off with the Omnicom Group and seems to be a bold step to jump start it’s digital growth after the reported account losses of the holding group.
Sapient’s closing shares on October 31 were priced a little more than USD 17 per share. Publicis Groupe has paid USD 25 per share, making it nearly a 44 per cent premium pay for the acquisition. The deal may be priced on the higher side but with good reason.
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.”
With the acquisition, Publicis Groupe will have access to new geographical markets and the ability to derive monetary numbers trhogh digital consultancy, ecommerce and IT. Publicis believes the acquisition will deliver around USD 62 million in cost savings over the next three years, through the integration of digital production.
“It will also give Publicis Groupe access to new markets and creating new revenue streams. This acquisition fulfills 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,” Mr Levy added.
Sapient generated USD 1.26 billion in revenue last year, up 12.3 per cent in 2012. The company has delivered compound annual revenue growth of 15 per cent from 2010 to 2013. The USD 3.7 billion price Publicis is paying is a premium on Sapient’s current USD 2.46 billion market valuation.