Publicis Buys Epsilon

Publicis buys Epsilon.

Publicis Groupe buys Alliance Data System’s Epsilon for $4.4 billion.
   
Epsilon collects data including transactions, location, and web activity from 160 million clients.  It generated revenue of $1.9 billion last year.
   

Arthur Sadoun of Publicis said: ‘Clients are facing mounting challenges in a data-led and digital-first world.  Epsilon brings to our existing assets in creativity and technology an acceleration in data and platform that positions us as a clear leader in personalized experience at scale.  The Epsilon buy is a significant investment for a company of our size.  We’re convinced it’s the right move in a world where data is at the heart of all decisions and the mobile phone is our main interface.  Our clients are facing increasing pressure from the rise in consumer expectations, the mainstreaming of direct-to-consumer brands, and new data regulations.  They must transform to meet this new market imperative.  With the acquisition of Epsilon, Publicis Groupe brings the necessary technology, expertise, and talent to complement our 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 speed up 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.  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 of Alliance Data Systems said: ‘I’m happy to say today’s announcement is a trifecta win for Alliance Data, Epsilon, and Publicis Groupe.  The announcement of this transaction is 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 stay intact, and we look forward to working with Publicis Groupe to develop an even broader relationship promoting mutual and sustainable growth going forward.’
   

Maurice Levy of Publicis said: ‘The Conseil de Surveillance has thoroughly reviewed this transaction and has approved it unanimously considering that it would be good for all stakeholders.  For the clients, it will speed up the transformation of Publicis making it a more relevant and more competitive partner.  For the talent in a highly competitive environment for talent, Publicis will benefit from a remarkable leadership team, 3,700 data scientists, 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 a double-digit level.  It gives a stronger profile of growth and a new and better-balanced mix of product and revenues.  Thus, it will generate value creation that will greatly help 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 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.’ 
   

Bryan Kennedy 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 help Epsilon and Conversant’s people and bring great value and a new opportunity to the clients we serve.’
   

Under the terms of the agreed transaction, Publicis Groupe will get Epsilon for a cash consideration of $4.40 billion, representing a net sale 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 of $485 million.
   

Allen & Company, BNP Paribas, Citi, and JP Morgan acted as financial advisors.  Wachtell, Lipton, Rosen & Katz serves as legal adviser to Publicis Groupe.