NEW YORK Digitas took another step in its global expansion plan today, agreeing to acquire French Web agency Business Interactif.
The pending acquisition, worth approximately $182 million, will lead to the creation of Digitas France, adding to the agency's footprint in Europe and bringing it a presence in Tokyo and Shanghai. (Digitas also has an office in London. The company is based in Boston.)
Publicis Groupe has made the global expansion of Digitas a key goal since acquiring the agency in December for $1.3 billion.
"In context of a strong Google-DoubleClick and Microsoft-Atlas, scale is going to matter on the Internet more in the next three or four years than ever before," said Digitas chairman David Kenny.
Digitas rival Avenue A/Razorfish is also building international capabilities through acquisitions. The aQuantive-owned agency in the past year has scooped up small shops in several European and Asian markets. (Microsoft inked a deal to buy aQuantive for $6 billion last month.)
Kenny said Digitas would look to expand more in Europe and Asia, but indicated he was uninterested in buying small shops, as aQuantive has done.
"In my opinion, things that are less than 150-200 people you could do yourself organically," he said. "I'm biased to substantial acquisitions that can build leadership."
Digitas parent company Publicis Groupe inked a deal to buy the 49 percent of Business Interactif shares controlled by its founders, Emmanuel Henrion and Francois de la Villardiere. Business Interactif's board of directors recommended the shareholders of the publicly traded company accept Publicis' offer of about $13.40 per share, half stock and half cash. In all, the deal is worth about $182 million, Publicis said. The transaction is expected to close in the third quarter. Henrion and Villardiere will lead Digitas France for at least three years.
The deal brings Digitas a strong presence in France, the home market of Publicis, and helps it build capabilities in key areas such as search optimization and e-mail marketing. Kenny said Digitas would look to expand these capabilities globally.
"These businesses have global potential," he said. "We did it as much for the capabilities as having an agency in France."
Publicis has spent the last few months reorganizing Digitas. It folded Digitas-owned Medical Broadcasting Company into the operations of the main agency. More significantly, Modem Media was recast as the digital arm of Publicis' worldwide network. In the process, Modem's London office became part of Digitas to serve as a launching pad for European expansion.
Business Interactif had $38 million in revenue in 2006 and $530,000 in operating income. It offers Web creative, media and analytics to clients like L'Oreal, Nestle and Lancome.
"It's not just the American clients into Europe," Kenny said. "It's the European clients going to America and Asia."