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Home Business Publicis Groupe acquires Epsilon in $ 4.4 billion deal

Publicis Groupe acquires Epsilon in $ 4.4 billion deal

clarification: A previous headline on this story described the transaction as a $ 3.95 billion deal. Under the terms, Publicis will acquire Epsilon for a cash consideration of $ 4.4 billion with a net purchase price of $ 3.95 billion after "deducting the benefit of acquisition-related tax step-up," it stated.

Publicis Groupe is acquiring data giant Epsilon in a $ 4.4 billion deal, the company announced Sunday. The transaction is expected to close in the third quarter.

"With the acquisition of Epsilon, Publicis Groupe is bringing in 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," Publicis Groupe Chairman-CEO Arthur Sadoun said in a statement, adding that the deal would help Publicis "deliver personalized experiences at scale" for its clients.

Epsilon for a cash consideration of $ 4.4 billion, representing a net purchase price of $ 3.95 billion "after deducting the benefit of acquisition-related tax step-up," according to the statement.

The Epsilon sale is the largest agency deal in years, coming close to Dentsu Inc.'s $ 4.9 billion acquisition of Aegis Group in 2013 (the largest-ever acquisition of an agency company) and WPP's $ 4.37 billion purchase of Young & Rubicam in 2000. (WPP announced Y & R as a $ 4.7 billion transaction, but the final value of that stock totaled $ 4.37 billion.) Even so, a takeover by Public will not change the top of the agency company rankings. Publicis will continue as the world's third largest agency, behind WPP and Omnicom Group.

Epsilon, which has been owned by Irving, Texas-based Alliance Data Systems since 2004, is ranked as the world's 13th-largest agency, according to Ad Age Datacenter. In the statement Sunday, Publicis said Epsilon had $ 1.9 billion in net revenue in 2018, with 97 percent of that from the U.S.. Epsilon has 9,000 employees, including 3,700 data scientists.

Epsilon's loyalty software serves 600 million accounts and it has more than 250 million unique consumers identified in the US, and its proprietary platforms Conversant handle 1 billion updates every 5 minutes to further improve messaging based on consumer insights on a real time basis, " according to the public statement.

The deal for the e-mail and data marketing comes last November, it said "what's the business of Epsilon business?", Including "a potential sale of the business." Goldman Sachs.

Bryan Kennedy, CEO of Epsilon, said in a statement: "During extensive discussions with the public leadership team during the recent review process, we found a powerful common ground, including shared values ​​and a strong vision for the future of data-driven, digital first marketing. "

The Publicis deal follows Interpublic Group of Cos. ' Acquisition of another data venture, Acxiom, for $ 2.3 billion.

The transaction comes as a publicity with changes in the ad market amid the decline of traditional advertising, shifts in digital, cost pressure from clients and competitive challenges from consultancies.

The current landscape among industry leaders places a high premium on having first-party data assets, which are significantly more accurate than third-party data and allow marketers to create personalized, targeted ads that often boost higher conversions.

The acquisition gives publicity to tools that could help it woo marketers, as Epsilon is equipped with a wealth of first-party data assets – something Publicis previously laquered.

Jay Pattisall, an agency analyst at Forrester, says, "Publicly got into this acquisition for the data and identity resolution piece." "Epsilon brings is a proprietary set of first-party data segments and identity resolution."

Pattisall says he believes Publicis wants to integrate Epsilon into existing solutions, pointing the company's "Power of One" motto, as opposed to creating two separate businesses – ie "Publicis Epsilon." Search integrations would bode well for the holding company, he suggests.

For instance: Conversant, Epsilon's ad tech marketing automation business, would serve as a media agency like Starcom well. Publicis Spine, which handles the sort of data assets that Epsilon brings to the table, is another obvious, more appealing fit, Pattisall says.

"Multiple data sets come together, and that helps activate audiences across channels," he adds. Publicis has an identity resolution capability in house, which they can layer on top of what they already have. "

Generally speaking, Epsilon makes its money through its data management offering, its loyalty platform and, to an extent, Conversant, to ad tech company that specializes in marketing automation.

Epsilon's Ability to Match Different Pieces of a Consumer Data – Email and IP addresses, for example – to build various consumer segments.

Alliance Data bought Epsilon for $ 314.5 million in October 2004 and expanded Epsilon through acquisitions.

Epsilon, Publicis shares closed on Dec 1, the lowest price since 2012. Publicis shares closed April 12 in Paris at 47.19 euros, up 0.9 percent for the day. Alliance Data shares closed April 12 at $ 180.93, up 3.0 percent.

Contributing: Bradley Johnson, E.J. Schultz


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