April 14, 2019 / 10:03 AM / 2 months ago

Publicis pays $4.4 bln for Epsilon to extend digital reach

PARIS, April 14 (Reuters) - Publicis will pay $4.4 billion to acquire Alliance Data's Epsilon marketing unit, the French advertising group said on Sunday, expanding its digital business and North American footprint.

The deal announcement, two weeks after Publicis confirmed talks about the purchase, bolsters efforts by the world's third-ranked advertiser to adapt to a fast-changing market increasingly driven by online client data.

"The addition of Epsilon will propel Publicis as a leader of data-driven personalised experiences at scale," the Paris-based company said in its statement.

Publicis and other traditional advertisers have been losing ground in a marketplace increasingly dominated by Facebook, Google and digital marketing specialists that track and target individual clients via their smartphones.

The French group's shares sagged after a fourth-quarter earnings miss in February and have fallen 15 percent in total over the past 12 months.

The Epsilon purchase is "a very significant investment for a company of our size", Publicis CEO Arthur Sadoun said. "But we're convinced it's the right move ... in a world where data is at the heart of all decisions and the mobile phone has become our main interface."

Epsilon, which brings a trove of data on some 160 million individual clients, generated revenue of $1.9 billion last year, almost entirely in the United States.

The $4.4 billion cash price amounts to $3.95 billion excluding tax, or 8.2 times Epsilon's 2018 earnings before interest, tax, depreciation and amortisation (EBITDA), Publicis said.

The French company said it would cancel a previously announced share buyback and finance the Epsilon deal with debt, adding that the acquisition would be earnings- and cash flow-accretive from next year onwards. (Reporting by Laurence Frost and Gwenaelle Barzic Additional reporting by Gilles Guillaume; Editing by Susan Fenton)

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