Publicis announces Sunday that it has reached an agreement with the American group Alliance Data Systems (ADS) to buy Epsilon, its subsidiary specialized in marketing and data, for 4.4 billion dollars (3.9 billion euros), in a context of increased competition from the web giants. View as "a unique opportunity"by publicis facing the changes in the advertising sector, this acquisition payable in cash – in the amount of 3.95 billion net of taxes – was unanimously approved by its management board and its supervisory board, says a communicated.
The operation "accelerate the implementation of the strategy" from Publicis "aiming to become the preferred partner of its customers in their transformation"said the group. This transaction comes as advertising agencies such as Publicis suffer from competition from large digital platforms, such as Google and Facebook, that target advertisers directly. Publicis promises progression "double digit" And this "from 2020" for net earnings per share and free cash flow per share.
$ 1.9 billion in revenue in 2018 for Epsilon
This acquisition is expected to be finalized "in the second half of 2019" and will be financed by debt and using "a portion of available cash". The group is counting on "complete deleveraging" four years after the closing of the transaction.
The American company of technologies and platforms Epsilon, "rich in unmatched data heritage", according to Publicis, has "generated $ 1.9 billion in net revenue, of which 97% in the United States" in 2018 and employs some 9,000 employees, including 3,700 data scientists and 2,000 engineers based in Bangalore.
A "very substantial" investment for Publicis
The transaction was concluded "attractive terms"says Publicis. It is however "a huge investment for a company of our size"admits Arthur Sadoun, chairman of the executive board, quoted in the statement. "But we are convinced that this is the right move to best serve our customers in a world where data is at the heart of all decisions and where the first screen has become our mobile", he believes.
At the beginning of the month, the French advertising group confirmed to study the operation. For Maurice Lévy, Chairman of the Publicis Supervisory Board, this acquisition "accelerates the transformation" of the French group while generating "a value creation that is largely beneficial" to shareholders. At the same time, Publicis announces "strategic partnership" with Alliance Data, whose CEO Edward J. Heffernan says the two groups "share the same culture and the same strategic vision".