Publicis Groupe SA, the third-biggest advertising agency holding company in the world, has agreed to pay $3.7 billion for Boston, Massachusetts-based Sapient Corp.
The move by France-based Publicis comes after the failed merger attempt with Omnicom, which broke down in May. Publicis said the acquisition “establishes Publicis Groupe as the clear leader in the digital age”.
The company is offering Sapient shareholders a premium to build its digital business and get a stronger foothold in the U.S. Sapient shareholders will receive $25.00 per share in cash. Bloomberg reports that the company is paying 19.2 times Sapient’s gross earnings, compared to “multiples of 14.5 times for similar targets over the past five years”.
Publicis said digital revenues will account for more than 50 percent, three years ahead of its initial 2018 plan. It will create a platform called Publicis.Sapient that will focus exclusively on digital advertising, omni-channel commerce, consulting and technology. The platform will rely on capabilities from SapientNitro, Sapient Global Markets, Sapient Government Services, and Publicis’ existing digital firms, Digitas LBi, Razorfish Global and R Publicis to “help clients better anticipate trends and continue to innovate in the fast-growing and highly dynamic digital environment”.
Sapient’s current CEO, Alan J. Herrick, will head Publicis.Sapient if the deal goes through.
Maurice Lévy, Chairman and CEO of Publicis Groupe, said in the announcement, ““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.”
The boards of both companies unanimously agreed to the acquisition. Publicis shares were down on Monday, while Sapient’s stock is up over 42 percent in morning trading at the time of this posting.
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