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Publicis Groupe to buy tech giant Sapient in ‘transformative’ US$3.7 billion deal

Sapient and Publicis GroupeIn a move that is sure to bolster the company’s digital ambitions, Publicis Groupe has announced the acquisition of technology firm Sapient.

The acquisition, which Publicis Groupe describes as “transformative” in a press release today, is part of the company’s plan to “become the leader at the convergence of communication, marketing, commerce and technology.”

The deal comes just over half a year after a proposed merger between Publicis Groupe and Omnicom collapsed.

The Publicis-Sapient deal would not lead to the merging of any brands within Publicis Groupe or Sapient, which runs the SapientNitro brand, a Publicis Groupe spokeswoman told Mumbrella today.

The announcement from Publicis Groupe:

Transformative acquisition establishes Publicis Groupe as the clear leader in the digital age:
• Accelerates achieving Publicis Groupe’s objective to become the leader at the convergence of communication, marketing, commerce and technology
• Will create a platform to be named Publicis.Sapient — the largest and most advanced — focused exclusively on digital transformation and the dynamics of an always-on world across marketing, omni-channel commerce, consulting and technology
• Publicis Groupe digital revenues will account for more than 50%, three years ahead of 2018 plan
• Publicis Groupe strengthens leadership with Sapient CEO and Co-Chairman Alan J. Herrick joining Publicis Groupe senior management team (Directoire+) as CEO of Publicis.Sapient; Jerry A. Greenberg, Co-Founder and Co-Chairman of Sapient, joining Publicis Groupe Supervisory Board
• Transaction approved unanimously by the Management and Supervisory Boards of Publicis Groupe and the Board of Directors of Sapient, which unanimously recommends Sapient shareholders accept the Publicis Groupe tender offer
• Accelerates Publicis Groupe growth and accretive to headline EPS PARIS and BOSTON, November 3, 2014 – Publicis Groupe (Euronext Paris: FR0000130577, CAC 40) and Sapient (NASDAQ: SAPE) today announced that they have entered into a definitive agreement under which Publicis Groupe will acquire Sapient in an all-cash transaction for $25.00 per share. The agreement has been approved unanimously by the Management and Supervisory Boards of Publicis Groupe and the Board of Directors of Sapient.

Maurice Lévy, Chairman and CEO of Publicis Groupe, said: “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 Publicisgroupe.com 2/7 creating new revenue streams. This acquisition fulfills many of Publicis Groupe’s objectives: we will enhance our leadership position in digital, achieve our goal of deriving 50% of our revenues from digital and technology three years ahead of our 2018 plan, and leverage technology, consulting capabilities to expand in new verticals, and offering new and exciting opportunities to our talents.”

Alan J. Herrick, Sapient President, CEO and Co-Chairman, added: “This transaction provides substantial value to our shareholders, offers an ideal cultural match for our people and provides an opportunity to share a wealth of new capabilities with our clients. The Sapient team has been on a 24-year journey building a company with the objective of creating significant impact for our clients and the industries in which they operate. With Publicis Groupe, we have found a partner that accelerates the level of transformation we can drive into the marketplace.”

Strategic Rationale

The world is undergoing significant transformation characterized by the impact of technology on society, empowered consumers, the rise of new communications channels, omni-channel commerce and one-to-one marketing. This new age of consumption demands a new marketing paradigm to serve the needs of companies to connect with empowered consumers. Publicis Groupe is leading the way.

• A Crown Jewel in the Quest for Digital Business: Sapient provides a unique opportunity for Publicis Groupe by increasing its digital/interactive services exposure to 50% of revenue in 2015, while at the same time offering great opportunities for its people to expand their careers and for its clients to achieve their digital transformation objectives.

• Unmatched Technology Capability: Sapient brings unmatched technology strength, both from front-end technologies that help shape innovative consumer experiences and from tremendous enterprise technology that helps clients address large scale IT issues in order to advance their business in a disrupted digital marketplace.

• Globally Distributed Delivery Model: Leveraging the strength of Sapient’s global footprint will allow Publicis.Sapient to seamlessly perform services, delivering greater value to clients at a competitive cost and in an accelerated time frame. In an industry where talent is scarce, it also provides access to a highly desirable pool of talent in India thanks to the strong base that Sapient has built there over the last 15 years.

• Accelerating Revenue Growth: The addition of Sapient, which delivered compound annual revenue growth of ~15% from 2010 to 2013, immediately boosts Publicis Groupe’s growth Publicisgroupe.com 4/7 profile; the power of the combined platform is expected to drive strong revenue upside by improving the service offering available to existing clients of each company and creating opportunities to gain new clients through a differentiated offering.

• Identified Cost Synergies: The combination of Publicis Groupe and Sapient is expected to drive cost savings through the integration of digital production leveraging Sapient’s substantial production infrastructure in India, real estate consolidation, G&A reductions and procurement savings.

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