Stagwell Group Buys Code and Theory

Digital shop joins Mark Penn's expanding portfolio

Adding to its agency portfolio, Stagwell Group today said it acquired a majority stake in Code and Theory, a digital creative shop based in New York.

Stagwell is led by Mark Penn, a former executive with WPP Group and Microsoft, who has also served as a pollster and adviser to Bill and Hillary Clinton. Penn launched the investment company last year with a $250 million war chest and an eye toward playing in the media and marketing arena, with a focus on digital.

Its acquisition of Code and Theory follows its fourth-quarter purchases of the National Research Group from Nielsen and public relations firm SKDKnickerbocker.

A 15-year-old agency, Code and Theory employs more than 300 staffers across five offices and is best known for handling various interactive chores for clients including Bloomberg, Burger King, The Huffington Post, Mashable, Maybelline and Vogue. In December, the agency added digital work from insurer New York Life.

This marks Stagwell's largest acquisition to date in terms of employees. Financial terms were not disclosed.

"Digital is a critical and core part of our strategy," said Penn in a statement. "Few firms have the state-of-the art experience that Code and Theory brings to the table in a digital space."

Code and Theory will continue to operate as a stand-alone agency run by the current management team. Co-founders Dan Gardner and Brandon Ralph continue to hold a minority ownership stake.

"Code and Theory is very proud of what we've accomplished as a team," said Ralph. "We're looking forward to working with Stagwell to take our company to the next level."

The deal follows the recent trend of advertising-related M&A activity initiated outside the realm of traditional holding companies. ICF International's 2014 acquisition of midsize advertising shop Olson for $295 million provides another example.