Publicis Groupe’s $3.95 billion (£3.13 billion) deal to buy data-driven marketing business Epsilon will allow its clients to deliver personalized experience at scale and take back control of their customers, according to Publicis chief executive Arthur Sadoun.
Speaking to Campaign after the deal was finalized overnight, Sadoun, who is also chairman of the group, said he was happy the deal had been completed just two-and-a-half months after it was announced, because “time is of the essence.”
“What we are really doing here is completing our transformation to truly become the market leader at personal experience at scale. This is a truth behind the fact that we want it to go fast,” he continued. “If you look today, at the assets we are having in data, in creative, in media and in technology, we are clearly the only company that has those four assets at scale. And that we can combine in a seamless way.”
The purchase price of $3.95 billion represented a discount on the $4.4 billion Publicis originally agreed to pay for the business in April.
Sadoun said the price reflected the fact that Publicis was the “best partner” from a “strategy point of view,” even if its offer was not the most compelling on price.
“We are bringing something that will create value for them,” he added.
The steepest competition to acquire Epsilon came from private equity buyers rather than fellow holding companies or management consultancies. Publicis beat Goldman Sachs in the final round, Sadoun said.
Holding companies were not the competition that mattered, because their financial structure means it is “difficult to have the financial backbone to do this kind of move,” Sadoun said. “Publicis Groupe has a very strong free cash flow.”
The management consultants were not in contention either. “Accenture or Deloitte, honestly, doesn’t understand marketing enough to go for this kind of big acquisition,” Sadoun said.
Bryan Kennedy, chief executive of Epsilon, will continue in his role and join the Publicis executive committee, reporting to Sadoun.
Sadoun declined to comment on whether Kennedy was required to stay at Publicis for a certain length of time after the deal.
“As you can imagine, we don’t disclose the contract of our management team,” he said. “What I can tell you is that he’s all in.”
Publicis will integrate its existing data platforms such as PeopleCloud into Epsilon, under the stewardship of Kennedy.
The integrated data and tech platform will sit at the core of the group, so clients from each of its four verticals — Publicis Communications, Publicis Media, Publicis Sapient and Publicis Health — can use it.
Epsilon’s creative agency will be integrated into the Publicis Communications firms in North America, including Publicis Worldwide, Saatchi & Saatchi, Bartle Bogle Hegarty and Fallon.
“We want to make sure that those brands are strengthened by the advertising capabilities of Epsilon,” Sadoun said.
Affiliate marketing network CJ Affiliate will be merged into Publicis Media.
However, Sadoun said he was not anticipating any departures from Epsilon as a result of the deal.
“Maybe there are things that we are not anticipating, but I have spent enough time with the management team to feel that we are already building a very strong team,” he said.
Sadoun added that the acquisition was a response to challenges including changing consumer expectations, the rise of direct-to-consumer brands, the pressure that ecommerce platforms are putting on traditional businesses and new data regulations.
“There is today only one imperative for clients, which is their ability to take back control of their customer. Delivering personalized experience at scale is the only way to do it. And this is why we felt with the completion of our acquisition [of Epsilon], we have the tools to do it,” he explained. “We want to make sure that we can go into H2 – where there is, of course, a lot of client opportunities and some new business coming on – as one with such an outstanding set of expertise.”
This story first appeared on campaignlive.co.uk.