When it completes its proposed $3.7 billion acquisition of Sapient, Publicis Groupe will rebrand the acquired company Publicis.Sapient, ensuring that clients and prospects know that the Groupe’s consulting assets are getting a huge bolt-on boost which will be key to the Publicis Groupe offering. The new unit, Publicis said, would lead the company’s digital transformation efforts leveraging the capabilities of SapientNitro, Sapient Global Markets, Sapient Government Services, DigitasLBi, Razorfish Global and Rosetta. The heads of those operations will report into Publicis.Sapient once the deal is completed.
Digital which now accounts for about 41% of Publicis Groupe’s revenues, will account for 50% of its top line by 2015, the company said.
Publicis.Sapient will be led by Alan Herrick as CEO. Herrick is a Co-founder and CEO of Sapient and he will join the Publicis Groupe senior management team (Directoire+) and becomes a potential candidate to succeed Publicis Groupe CEO Maurice Levy, who has said he will step down in 2017. Jerry A. Greenberg, Co-Founder and Co-Chairman of Sapient will join the Publicis Groupe Supervisory Board.
Word of the Sapient acquisition broke Sunday and the companies confirmed the proposed deal Monday morning.
"The world is transforming at dramatic pace, and we are leading the change in behavior, paving the way for the future," said Publicis Groupe CEO Maurice Levy, on an investor call Monday morning. "We now have the opportunity to engage in commerce all the time and the convergence of digital environment means we have an important shift in the evolution of consumers. [With this deal] we have now experience with marketing, communication and technology. These are important changes our clients need to anticipate and react. They also have to leverage the proliferation of data. There are a lot of changes they have to face. This disruption provides an innovative solution. This is about the new age of consumer."
Publicis sought this deal in order to strengthen its digital platform, as well as expand its global footprint, which includes 13,000 workers across 37 offices.
"We plan to expand our consulting services and together will have an unmatched technology and digital marketing platform, omni-channel commerce delivery model all underlined with deep analytics that runs across the business," said Herrick.
"What Sapient does that Publicis doesn't do is [have] deep expertise in consulting issues in industries that companies are struggling with. The second idea that Publicis does have, but that we have in spades, is unmatched technology knowledge to solve a lot of challenges. And the final point is that Sapient has grown up in a global distribution network that deploys and distributes works across the globe in a way that delivers efficiencies and speed.”
Still, there are challenges with this deal. SapientNitro adds little to Publicis strategically, says Pivotal Research Group financial analyst Brian Wieser. "Although Sapient offers world-class capabilities in various digital marketing fields, so do several other Publicis agencies including Rosetta, Razorfish (which now reports to Rosetta management) and Digitas LBi," he said in a note to investors.
"While Publicis has the capacity for such a transaction this deal would make it harder for Publicis to pursue something that might actually be 'transformative' in the future. Implicitly, Sapient would make a Publicis acquisition of competitor holding agency Interpublic [IPG] much more unlikely than it already appears presently. However, IPG would have provided Publicis with digital marketing agencies R/GA and Huge, as well as other businesses which would provide much more in the way of revenue and cost synergies."
Publicis is shifting its previously announced November 7 strategic review plan to later this month. "Obviously with this acquisition, we have to make changes and we will announce the new data shortly," says Levy. "If I had to say only one thing, it is the future. When you look at companies and our competitors, no one will be best positioned for the future [than us|.”