Marketing Firm Goes Public as Allstate, Xerox Come Aboard
BOSTON--Digitas founder Michael Bronner and agency president Kathy Biro sipped champagne last Tuesday at the Nasdaq exchange in New York, while watching the impressive debut of the marketing-services company's common stock.
Trading as DTAS on the Nasdaq exchange, the initial offer was $24 per share, about $5 higher than anticipated by underwriters led by Morgan Stanley Dean Witter.
The stock opened at $40, its high for the day, dipping to a low of $27 7/8 before closing at $29 1/2 on Tuesday. First-day trading volume was nearly 11 million shares. Digitas, Boston, netted $135.4 million, which it will use to retire debt and fund international expansion, the agency has said.
At closing Thursday, amid a general slide among tech-driven stocks, Digitas was trading at $26 1/4. The agency sold about 16 percent of itself in the IPO, with San Francisco investment firm Hellman & Friedman and its affiliated partnerships selling the most shares (3.1 million). H&F retains a 60 percent stake in Digitas.
Chairman David Kenny, remaining in Boston to preside over an agencywide staff luncheon celebration, called the performance "fabulous."
In light of recent market fluctuation and Digitas' relatively modest size ($187 million in 1999 revenues), "they did very well," noted Bill Montbleau, an industry consultant in Burlington, Mass. "They're no [Internet holding company] CMGI. They should be pleased."
Separately, Allstate, Northbrook, Ill., and Xerox, Stamford, Conn., recently tapped the agency for assistance with interactive marketing strategies, Biro confirmed. Citing the continuing quiet period associated with the IPO, she declined further comment.
For Allstate, Digitas will handle "various aspects of our new business-model launch," said Rob Apatoff, chief marketing officer at Allstate. That initiative is designed to facilitate communications between Allstate's nationwide call centers and the insurer's 15,000 agents, Apatoff said.
A Xerox official declined to disclose the nature of the assignment awarded to Digitas.