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Publicis Group to acquire Alliance Data's Epsilon Business

Ad group acquires digital marketing agency as it steps up business transition.

Publicis, the world's third-largest advertising revenue group, said on Sunday it had acquired Epsilon, a digital marketing agency, from Alliance Data Systems for $ 4.4 billion in cash, while seeking to accelerate data analysis momentum.

The deal represents the largest acquisition by Publicis, which said it would pay a net purchase price of $ 3.95 billion after "tax step-up". This represents a multiple of 8.2 times adjusted 2018 earnings before interest, taxes, depreciation and amortization.

"When you look at the kind of challenges our clients are facing in a data-led, digital-first world, it’s obvious that companies like us need to make bold moves," said Arthur Sutton, president, and chief executive officer of Publicis Groupe in the interview.

Like its competitors WPP and Omnicom, Publicis was under pressure because online platforms such as Facebook and Google had upended the traditional middleware model and dominated digital advertising. New competitors have also emerged in the form of professional service companies such as Accenture, which last week announced it would buy Cirruseo, a French cloud consulting firm.

Publicis previously said that it will conduct acquisitions in the areas of data, dynamic creativity, and digital transformation, as its goal is to reshape its business model to a holding company on a single platform. The Epsilon agreement follows the acquisition of Sapient Digital and Technology in 2014 to increase its technological firepower.

Epsilon offers a range of services including loyalty programs, email marketing, consumer data collection, transaction and website activity.

"There is no way for our customers to continue growth and reduce costs if they can not deliver this in their own markets," said Mr. Saadoun.

He added that Publicis had been interested in buying Epsilon for years. Has been in discussions about the agreement since December and saw a competition for the company from private equity firms and other strategic buyers. "We are buying a leading data analysis company that can enrich and evaluate the data of the first person in a unique way."

In 2018, Epsilon achieved net income of $ 1.9 billion, 97 percent of which was in the United States and employs about 9,000 people worldwide.

Publicis was informed in this transaction by the bankers at Citigroup, JPMorgan and BNP Paribas.

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