Publicis Groupe has agreed to buy "crown jewel" Sapient in a $3.7 billion cash deal that it hopes will accelerate its digital expansion and put its failed merger with Omnicom behind it.
Publicis Groupe will form a new division called Publicis.Sapient, which will bring together SapientNitro, Sapient Global Markets and Sapient Government Services with Publicis Groupe’s DigitasLBi, Razorfish Global and Rosetta arms.
Alan Herrick, chief executive and co-chairman of Sapient, will lead Publicis.Sapient as chief executive. He will also join Publicis Groupe’s new senior management team, the Directoire+.
Under the terms of the deal Publicis Groupe will buy Sapient for $25 per share, a 44 percent premium on the closing price for Sapient on Friday, the final day of independent trading before the deal was announced.
Sapient has 13,000 employees in 37 cities around the world and generated income of $1.4 billion in the 12 months ending June 30.The deal has been approved by the boards of both companies.
Maurice Levy, chairman and chief executive of Publicis Groupe, called Sapient "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."
The deal will also give Publicis Groupe access to new markets and new revenue streams.
"This acquisition fulfills many of Publicis Groupe’s objectives," Levy said. "We will enhance our leadership position in digital, achieve our goal of deriving 50 percent of our revenues from digital and technology three years ahead of our 2018 plan, and leverage technology consulting capabilities to expand in new verticals" while offering "new and exciting opportunities to our talents."
Publicis Groupe’s financial advisors were Bank of America Merrill Lynch and Rothschild. The legal advisor was Wachtell, Lipton, Rosen & Katz. Goldman, Sachs & Co and Blackstone Advisory. Cravath, Swaine & Moore advised Sapient on the financial and legal aspects of the deal respectively.
A planned $35 billion "mega-merger" between Publicis Groupe and Omnicom fell apart in May, with both parties citing cultural differences.