Paris, France-based advertising company Publicis Groupe announced it is acquiring Epsilon — which is Alliance Data’s marketing arm — in a $4.4 billion (cash consideration) deal earlier this week. This transaction is expected to close in the third quarter.
“Our clients are facing increasing pressure from the rise in consumer expectations, the mainstreaming of direct-to-consumer brands and new data regulations. The only response is to deliver personalized experiences at scale. They have to transform to meet this new market imperative,” said Publicis Groupe chairman and CEO Arthur Sadoun in a statement. “With the acquisition of Epsilon, Publicis Groupe is bringing the necessary technology, expertise and the talent to complement our offer in creativity, media and business transformation, and help our clients leapfrog their competition and grow profitably.”
This is one of the biggest agency deals in years and it came close to Dentu’s $4.9 billion acquisition of Aegis Group in 2013 and WPP’s purchase of Young & Rubicam for $4.37 billion in 2000. Epsilon has been owned by Alliance Data Systems since 2004 and it is ranked as the 13th largest agency company according to Ad Age. Alliance Data had acquired Epsilon for $314.5 million back then.
“I’m pleased to say today’s announcement represents a trifecta win for Alliance Data, Epsilon, and Publicis Groupe. The announcement of this transaction represents 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,” added Alliance Data Systems’ President and CEO Edward J. Heffernan. “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.”
Last year, Epsilon hit $1.9 billion in net revenue. And 97% of that revenue was from business in the U.S. Currently, Epsilon has 9,000 employees and 3,700 of them are data scientists. Epsilon’s loyalty software serves over 600 million accounts and 250 million unique consumers are based in the U.S.
Epsilon generates its revenue through a data management offering, its loyalty platform, and an ad tech arm company called Conversant. The Conversant platform is able to handle 1 billion updates every 5 minutes.
“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,” explained Epsilon CEO Bryan Kennedy. “Our discussions illuminated the unmistakable market opportunity that combining our complementary offerings would represent. I strongly believe that joining Publicis will benefit Epsilon and Conversant’s people and bring great value and new opportunity to the clients we serve.”
