Total acquisition costs for entities integrated during 2018 (gross payments, before acquired cash) came to euro 136 million. In addition, euro 130 million was paid out in earn-outs and euro 21 million to buy-out non-controlling interests.
The Group did not buyback any of its own shares in 2018, except for those shares bought under the liquidity contract.
One of the key events in 2019 was the Epsilon acquisition, the biggest deal in the Group’s history. There were also a number of other small-scale acquisitions and disposals during the year, helping to accelerate the Group’s tilt towards strategic core assets.
On February 14, 2019 Publicis Groupe announced that, following a sale process in 2018, the Group entities that own Proximedia had entered into exclusive negotiations with Ycor for the sale of all of Proximedia. With operations in France, Belgium, the Netherlands and Spain, Proximedia provides digital services to SMEs, small enterprises, small shops and craftsmen for their online presence and promotion. As at December 31, 2018, Proximedia had 575 employees, including 231 in France, 311 in the Benelux and 33 in Spain. Publicis Groupe completed the disposal in the first half of 2019.
On April 14, 2019, Publicis Groupe announced that it had entered into an agreement with Alliance Data Systems Corporation to acquire Epsilon. Headquartered in the United States, Epsilon is a unique technology and platform company focusing on maximizing the value of its clients’ data. Epsilon generated USD 1.9 million in net revenue in 2018(1), of which 97% in the United States; employed 9,000 people, 3,700 of whom are data scientists and 2,000 are engineers based in Bangalore.
Epsilon’s expertise ranges across the entire consumer data lifecycle to structure and augment clients’ first-party raw data to put in place large-scale, personalized, multi-channel marketing campaigns
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.
This acquisition will accelerate the implementation of Publicis’ strategy to become the preferred transformation partner for its clients.
Under the terms of the agreement, Publicis Groupe acquired Epsilon in a USD 4.4 billion deal, representing a net purchase price of USD 3.95 billion after deducting the benefit of acquisition-related tax impacts. This gives an 8.2x multiple, based on a 2018 adjusted EBITDA of USD 485 million(2).
The deal was funded through Publicis Groupe’s successful euro 2.25 billion bond issued on June 5, 2019 in three tranches, a medium-term loan and USD 650 million in available cash.
The transaction was finalized on July 1, 2019, the date of first consolidation of Epsilon’s results. Consolidation was largely completed by end-December 2019. Epsilon is positioned at the core of the Group providing the expertise in gathering, enriching and leveraging first-party data to permeate all Group businesses. Epsilon’s advertising activities were merged into Leo Burnett, and the Group opted to conduct a strategic review of CJ Affiliate to explore various possibilities for generating value.
On August 19, 2019, Publicis Groupe announced its acquisition of Rauxa, an independent, full-service marketing agency. Rauxa has become part of Publicis Media, the Publicis Groupe media Solution Hub . Founded in 1999, the agency has averaged double-digit growth every year, with net revenue of around USD 70 million in 2018, and more than 300 employees spanning New York, Los Angeles, San Francisco, Seattle, Orange County and Dallas. Rauxa’s clients include Verizon, Samsung, Alaska Airlines, Vans, Celgene and 20 other leading client brands. Rauxa operates as a Publicis Media agency brand in the United States, and continues to be led by its founder Jill Gwaltney, and its President and Chief Executive Officer Gina Smith, reporting to David Penski, COO of Publicis Media US and Chairof Publicis Media Exchange (PMX), and Tim Jones, Regional CEO Americas for Publicis Media. Rauxa will work closely alongside Publicis Media’s digital agencies (Moxie, MRY and Digitas), driving deeper communications touchpoints across strategy, CRM and personalized creative.
Total acquisition costs for entities integrated during 2019 (gross payments, before acquired cash) came to euro 4,076 million. In addition, euro 123 million was paid out in earn-outs and euro 40 million to buy-out non-controlling interests.
The Epsilon acquisition led to suspending the share buyback program announced in early 2019, as the Group’s priority shifted to deleveraging. The Group did not buyback any of its own shares in 2019, except for those shares bought under the liquidity contract.
(1) As per Publicis Groupe accounting principles
(2) 2018 reported Epsilon EBITDA (operating margin before depreciation and amortization) adjusted for standalone carve-out costs of euro 21 million, share-based compensation charge of euro 30 million to align with Publicis’ accounting policy, euro 60 million of run rate cost reductions being implemented at Epsilon and before any potential cost synergies derived from this transaction. Conversion from euros to dollars at the 2018 average exchange rate of 1.18
