PUBLICIS GROUPE TO
ACQUIRE EPSILON
PARIS, April 14
2019 - Publicis Groupe (Euronext Paris:
FR0000130577, CAC 40) today announced it has entered into an
agreement with Alliance Data Systems Corporation (NYSE: ADS) under
which Publicis Groupe will acquire Alliance Data's Epsilon business
for a net purchase price of $3.95 billion after tax step-up (total
cash consideration of $4.40bn) and build a strategic partnership
with Alliance Data remaining business. This acquisition will
accelerate the implementation of Publicis' strategy to become the
preferred transformation partner for its clients.
The Directoire (Management Board)
and the Conseil de Surveillance (Supervisory Board) of Publicis
Groupe have unanimously approved this transaction considering it a
one-time opportunity to seize, given the evolution of the
industry and the implying transformation of marketing
solutions.
Arthur
Sadoun, Chairman and CEO of Publicis Groupe, said:
"Our clients are facing increasing
pressure from the rise in consumer expectations, the mainstreaming
of direct-to-consumer brands and new data regulations. The only
response is to deliver personalized experiences at scale. They have
to transform to meet this new market imperative.
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.
In 2018 with an unprecedented run
of major New Business wins, we demonstrated that we have the right
model to be the preferred partner of our clients in their
transformation. This acquisition will accelerate its
implementation, turbo-charge our game changers and help us grow
faster by offering an even more end-to-end solution to our
clients.
With this critical move, we are
going further, faster and deeper in our own transformation,
becoming a leader in this data-led, digital-first world. It's a
one-time opportunity, with very compelling financial terms and
delivering double-digit accretion of Headline EPS and Free Cash
Flow from Year 1 (2020).
We are thrilled to welcome
Epsilon's remarkable teams and look forward to working together for
our clients and growing our relationship with Alliance Data."
Edward J.
Heffernan, Alliance Data Systems' President and CEO, said:
"I'm pleased to say today's
announcement represents a trifecta win for Alliance Data, Epsilon
and Publicis Groupe. The announcement of this transaction
represents the culmination of an extensive assessment of strategic
options for our Epsilon business. With this transaction, we have
found what we believe to be the right home for Epsilon's
technology, data assets and associates.
Publicis Groupe will be the ideal
cultural and strategic fit for Epsilon and its Conversant business,
and will help drive Publicis Groupe's own transformation in today's
data-driven digital world.
Furthermore, the unique
relationships that have been cultivated between Epsilon and our
other Alliance Data businesses will remain intact, and we look
forward to working with Publicis Groupe to develop an even broader
relationship promoting mutual and sustainable growth going
forward."
Maurice Lévy,
Chairman of the Supervisory Board of Publicis, said:
"The Conseil de Surveillance has
thoroughly and carefully reviewed this transaction and has approved
it unanimously considering that it would be good for all
stakeholders.
For the clients: it will
accelerate the transformation of Publicis making it a more relevant
and more competitive partner.
For the talents: in a highly
competitive environment for talents, Publicis will be in a position
to benefit from a remarkable leadership team, 3 700 data scientists
and great technology teams and artificial intelligence experts.
For our shareholders: the
transaction, which was not planned, has great merits from a
financial point of view. The price is fair, the transaction is
headline EPS and Free Cash Flow accretive at double digit level, it
gives a stronger profile of growth and a new and better balanced
mix of product and revenues. Therefore, it will generate value
creation that will greatly benefit our shareholders.
The Conseil de Surveillance has
been convinced by the approach of the Directoire and its Chairman
and CEO, Arthur Sadoun, on the integration. The plan is reasonable
and should lead to a seamless integration with great potential in
growth and cost synergies. We are confident that the plan will
deliver the expected results on services, growth and
synergies."
Epsilon: a technology leader maximizing the value of its
clients' data at scale
Headquartered in the US, Epsilon
is a unique technology and platform company focusing on maximizing
the value of its clients' data. In 2018, Epsilon generated $1.9
billion of net revenue (3), 97% in the
United States. Epsilon employs approximately 9,000 employees,
including 3,700 data scientists and 2,000 Bangalore-based
technology delivery experts.
Epsilon's expertise spans across
the entire data lifecycle from client's first-party raw data to
personalized marketing campaigns, using technology, data and
platforms to:
-
Onboard client first-party
data using Epsilon's proprietary software suite (CRM, email and
loyalty programs) to create a clean, normalized and organized data
set
-
Enrich client's first-party
data with Epsilon proprietary data assets (demographic and contact,
behavioral and transactional, online and offline data)
-
Build unique ID customer
profiles based on enriched data and Artificial Intelligence for
segmentation and analytics
-
Activate data to deliver
personalized multichannel campaigns at scale with measurement and
real-time optimization
Epsilon's success is evidenced by
the endorsement of its blue chip clients:
-
Epsilon has gained the trust of at least 7 out
of the 10 largest US companies across various sectors including
Auto, Retail, Financial Services, CPG and Media
-
In addition, its top 50 clients have an average
tenure of 14 years and have generated an 8% yearly growth on
average over the last two years, demonstrating the significant
client benefits delivered by Epsilon.
Epsilon has built its assets in
technology, data and platforms at an impressive scale. For example,
its loyalty software serves 600 million accounts, it has more than
250 million unique consumers identified in the US, and its
proprietary platforms Conversant handle 1
billion updates every 5 minutes allowing to further improve
messaging based on consumer insights on a real time basis.
Epsilon has developed extremely
strong artificial intelligence capabilities allowing consumer
behavior predictions.
In a world where data privacy is
paramount, Epsilon remains at the forefront of consumer privacy,
cybersecurity and risk management compliance matters.
Bryan
Kennedy, CEO of Epsilon, said:
"We are thrilled to join the
Publicis Groupe family. During extensive discussions with the
Publicis leadership team during the recent review process, we found
powerful common ground, including shared values and a strong vision
for the future of data-driven, digital-first marketing.
Our discussions illuminated the
unmistakable market opportunity that combining our complementary
offerings would represent. I strongly believe that joining Publicis
will benefit Epsilon and Conversant's people and bring great value
and new opportunity to the clients we serve."
An acceleration of Publicis strategy to become the
preferred partner to clients in their transformation
In today's fast changing
environment, clients are shifting their investments towards
data/technology-driven marketing solutions which allow them to
foster customer engagement, support growth and reduce costs.
Publicis has set a clear ambition to combine creativity, data and
technology to address its clients' needs and become a leader in
marketing and business transformation. This model has been gaining
momentum as exemplified by Publicis Groupe's #1 position in New
Business ranking in 2018 and the growth of its "Game Changers".
Today, the acquisition of Epsilon is a one-time opportunity to
accelerate the implementation of Publicis' strategy to deliver
personalized experience at scale.
With Epsilon at the core, Publicis will become the first player to
offer a unique end-to-end services to its clients. It will result
in enhanced growth of its existing businesses while opening up new
opportunities in an enlarged $1.5 trillon industry.
Epsilon will fuel the entire Publicis organization, complementing
its existing Solutions and boosting its Game Changers:
-
On the creative side, Epsilon assets will bring
customer insights to improve ideation and build more relevant
campaigns. By powering the Dynamic Creative Engine, Publicis will
go one step further to adapt to real time context of customers (who
they are, what they do, what they buy)
-
On the media side, the connection between
Epsilon's data sets and Publicis Media's billions of touchpoints
will provide superior intelligence to build consumer IDs, segment
audiences and maximize media buying ROI by accurately measuring and
optimizing campaigns in real time
-
On the Digital Business Transformation side,
Epsilon will allow Publicis to deliver deep proprietary customer
insights to further optimize clients' business model
Conversely, Epsilon's potential
will be fully unlocked within Publicis Groupe, thanks to well
identified value creation levers. In particular, Epsilon will
benefit from Publicis' client portfolio and global reach to expand
further in the U.S. and overseas. Publicis also intends to
replicate the success of Epsilon's unique Auto platform to other
verticals (such as Health, Financial Services, Telecommunications,
Retail).
Compelling transaction terms with attractive shareholder
value creation
Under the terms of the agreed
transaction, Publicis Groupe will acquire Epsilon for a cash
consideration of $4.40 billion, representing a net purchase price
of $3.95 billion after deducting the benefit of acquisition-related
tax step-up. This implies an 8.2x multiple, based on a 2018
Adjusted EBITDA (1) of
$485m.
The transaction will be double
digit accretive to Publicis' headline EPS and Free Cash Flow per
share (2) from year
one (2020). As an illustration, based on 2018 Pro-Forma figures,
headline EPS accretion would equal +12.5% (4) and FCF
accretion +16.5% (5), excluding
any transaction-related synergies.
Publicis remains committed to its
45% dividend payout ratio and will put on hold its share repurchase
program in the context of this acquisition.
The transaction will be fully
financed with debt and cash on hand, maintaining a financial
profile in line with current BBB+ / Baa2 ratings, with full
deleveraging four years after completion of the transaction.
The transaction remains subject to
customary approvals and is expected to close in Q3 2019.
Advisors
Allen & Company LLC, BNP
Paribas, Citi and J.P. Morgan acted as financial advisors and
Wachtell, Lipton, Rosen & Katz is serving as legal advisor to
Publicis Groupe.
Conference calls
On Monday, April 15, 2019, at 8:00
AM CET/2:00 AM ET and at 2:00 PM CET/8:00 AM ET, Publicis Groupe
and Epsilon will host webcast presentations to discuss the
transaction. Links to the webcast and accompanying documents will
be available on Publicis Groupe's Investor Relations website.
This press
release contains inside information within the meaning of Article 7
of Regulation (EU) N° 596/2014
About Publicis
Groupe - The Power of One
Publicis Groupe [Euronext Paris FR0000130577, CAC 40] is a global
leader in marketing, communication, and digital transformation,
driven through the alchemy of creativity and technology. Publicis
Groupe offers its clients seamless access to its tools and
expertise through modular offering. Publicis Groupe is organized
across four Solutions hubs: Publicis
Communications (Publicis Worldwide, Saatchi & Saatchi, Leo
Burnett, BBH, Marcel, Fallon, MSL, Prodigious), Publicis
Media (Starcom, Zenith, Spark Foundry, Blue 449, Performics,
Digitas), Publicis Sapient and Publicis Health. Present
in over 100 countries, Publicis Groupe employs nearly 75,000
professionals.
www.publicisgroupe.com |
Twitter:@PublicisGroupe | Facebook | LinkedIn
| YouTube | Viva la
Difference!
Contacts Publicis
Groupe
Clément Leonarduzzi |
Corporate Communications |
+ 33
(0) 6 79 27 47 31 |
clement.leonarduzzi@publicisconsultants.com |
Sabrina Pittea / Karen Lim |
Corporate Communications |
+ 33
(0)1 44 43 76 91 / 78 61 |
sabrina.pittea@publicisgroupe.com |
Alessandra Girolami |
Investor Relations |
+ 33
(0)1 44 43 77 88 |
alessandra.girolami@publicisgroupe.com |
Chi-Chung Lo |
Investor Relations |
+ 33
(0)1 44 43 66 69 |
chi-chung.lo@publicisgroupe.com |
Disclaimer
Certain information contained in
this document, other than historical information, may constitute
forward-looking statements or unaudited financial forecasts.
These forward-looking statements and forecasts are subject to risks
and uncertainties that could cause actual results to differ
materially from those projected. These forward-looking statements
and forecasts are presented as at the date of this document and,
other than as required by applicable law, Publicis Groupe does not
assume any obligation to update them to reflect new information or
events or for any other reason. Publicis Groupe urges you
carefully to consider the risk factors that may affect its
business, as set out in the Registration Document filed with the
French Autorité des Marchés Financiers (AMF) and which is available
on the website of Publicis Groupe (www.publicisgroupe.com),
including an unfavorable economic climate, an extremely competitive
market sector, the possibility that our clients could seek to
terminate their contracts with us at short notice, the fact that a
substantial part of the Group's revenue is derived from certain key
clients, conflicts of interest between advertisers active in the
same sector, the Group's dependence on its directors and employees,
laws and regulations which apply to the Group's business, legal
action brought against the Group based on allegations that certain
of the Group's commercials are deceptive or misleading or that the
products of certain clients are defective, the strategy of growing
through acquisitions, the depreciation of goodwill and assets
listed on the Group's balance sheet, the Group's presence in
emerging markets, exposure to liquidity risk, a drop in the Group's
credit rating and exposure to the risks of financial markets.
This
announcement is distributed by West Corporation on behalf of West
Corporation clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Publicis Groupe via Globenewswire
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