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Publicis Groupe buys Epsilon in $4.4 billion cash deal

15 Apr 2019  |  Michaela Jefferson 
Publicis Groupe buys Epsilon in $4.4 billion cash deal

Publicis Groupe, the world's third biggest advertising network, has completed its largest acquisition to date with the purchase of data-focused digital marketing agency Epsilon for a total of $4.4 billion.

The deal comes as the group looks to grow its ability to drive data-driven, personalised experiences at scale. Epsilon employs 9,000 employees, including 3,700 data scientists and 2,000 technology delivery experts.

“Our clients are facing increasing pressure from the rise in consumer expectations, the mainstreaming of direct-to-consumer brands and new data regulations," said Arthur Sadoun, chairman and CEO of Publicis Groupe.

"With the acquisition of Epsilon, Publicis Groupe is bringing the necessary technology, expertise and the talent to complement our offer in creativity, media and business transformation, and help our clients leapfrog their competition and grow profitably."

The US-based agency was acquired from Alliance Data in a unanimous board decision for a net purchase price of $3.95 billion after tax step up - approximately 8.2 times its earnings before interest, tax and other charges in 2018.

Alliance Data Systems' president and CEO, Edward J. Heffernan, branded the acquisition "a trifecta win" for all three companies, adding that Alliance Data will be working with Publicis to develop "an even broader relationship promoting mutual and sustainable growth".

Commenting on the deal, Julie Langley, partner at Results International, said the acquisition made "total sense" for Publicis as it was one of the few networks lacking a major data-marketing arm.

"There’s also an interesting contrast between the acquisition strategies of the networks and the consulting firms. The latter have been adding creative services while the former have been adding data and technology skills. But ultimately they are competing for the same market; building ultra-personalised customer engagement," she said.

"Publicis will now be intent on ensuring that Epsilon’s core data capabilities are properly integrated, particularly with the creative offer. The ability of data to drive better creativity is central to the industry’s agenda and we only have to look to Wunderman Thompson to see a similar integration of capabilities at play."

According to its latest financial results, Publicis saw a -1.6% fall in organic net revenue for the first quarter of 2019, although reported net revenues were up 1.7%.

Sadoun said the results were "in line with expectations, confirming our take on what we anticipate for the year".

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