French advertising services giant Publicis Groupe SA (PUBGY) announced a strategic partnership with Israel-based digital advertising company Matomy Media Group, by acquiring a 20% stake in the latter. The investment will boost Publicis’ technology capabilities and is in line with its expansion strategies.
Per the terms of the agreement, Publicis will buy 17.9 million shares of Matomy stock at 227 pence ($3.65) per share, with an option to buy an additional 4.9% stake. This translates into the investment being potentially worth $82 million for a 24.9% stake.
Tel-Aviv-based Matomy specializes in performance-based advertising and offers technology to help advertisers optimize their online display and video advertising. The company boasts an impressive clientele, including American Express Company (AXP), HSBC and Experian.
The digital advertising industry is presently undergoing a remarkable transformation, with the technology-driven performance advertising area showing promising growth potential. The alliance would give Publicis access to Matomy's performance marketing platform and its latest ad technologies.
The French advertising company intends to integrate its established media-buying and digital-advertising capabilities with Matomy’s innovative technologies, thus setting up a leading state-of-the-art platform for performance-based advertising.
The deal signals Publicis’ enduring expansion strategy after its proposed $35 billion mega-merger with its American counterpart Omnicom Group Inc. (OMC) failed earlier this year. Last month alone, Publicis bought top Italian social media agency Ambito5, Canadian design consultancy Nurun, design firm Turner Duckworth and Berlin-based marketing agency Zweimaleins.
With big companies spending increasing amounts of money on online marketing, major advertising agencies have been showing remarkable interest in start-ups as a rapid way to achieve technological know-how. Last month, Publicis’ key competitor WPP plc (WPPGY) invested $25 million in U.S. advertising-technology company AppNexus. With this deal, Publicis is fast gearing up to capitalize on the surge in technology-driven online marketing.
Publicis currently sports a Zacks Rank #4 (Sell).
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