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PARIS–(BUSINESS WIRE) – Regulatory News:
Publicis Groupe (Euronext Paris: FR0000130577, CAC 40) (Paris: PUB)
announced today the signing of an agreement with Alliance Data
Systems Corporation (NYSE: ADS) under which Publicis Groupe will acquire
Alliance Data Epsilon for a net purchase price of $ 3.95
billion after tax (total cash consideration of $ 4.40 billion) and
establish a strategic partnership with the remaining activities of Alliance Data.
This acquisition will accelerate the implementation of Publicis'
strategy to become the preferred transformation partner of its customers.
The Management Board and the Supervisory Board
(Supervisory Board) of Publicis Groupe unanimously approved this
considering that this was a unique opportunity to seize, given the
the evolution of the industry and the implicit transformation of marketing
solutions.
Arthur Sadoun, Chairman and CEO of Publicis Groupe, said:
"Our customers are facing increasing pressure from rising consumer numbers
expectations, the integration of brands for the general public and new
data regulation. The only answer is to deliver personalized
experiments on the scale. They must transform themselves to meet this new market
imperative.
With the acquisition of Epsilon, Publicis Groupe brings to the group
the technology, the expertise and the talent to complete our offer
in creativity, media and business transformation, and helping our customers
exceed their competition and grow profitably.
In 2018, with an unprecedented series of major victories in new business, we
demonstrated that we have the right model to be the preferred partner of
our customers in their transformation. This acquisition will accelerate
its implementation, turbo-charge our game changers and help us grow
faster by providing an even more complete end-to-end solution for our customers.
With this critical movement, we are going further, faster and deeper in our
its own transformation, becoming a leader in this digital, a digital first
world. This is a unique opportunity, with very convincing financial conditions
and generating a double-digit increase in earnings per share and free cash flow
from the first year (2020).
We are delighted to welcome outstanding teams from Epsilon and look forward to
working together for our clients and developing our relationships with
Alliance Data. "
Edward J. Heffernan, President and CEO of Alliance Data Systems,
I said:
"I am pleased to say that today's announcement represents a victory for three
Alliance Data, Epsilon and Publicis Groupe. The announcement of this
This transaction represents the culmination of an in-depth evaluation of
strategic options for our company Epsilon. With this transaction, we
found what we believe to be the right home for Epsilon.
technology, IT assets and associates.
Publicis Groupe will be the ideal cultural and strategic solution for Epsilon
Conversant, and contribute to the dynamism of the Publicis Groupe Group
transformation in the digital world driven by data.
In addition, the unique relationships that have been maintained between
Epsilon and our other Alliance Data companies will remain intact, and
We look forward to working with Publicis Groupe to develop a
broader relationship fostering mutual and sustainable growth
towards the front. "
Maurice Lévy, Chairman of the Publicis Supervisory Board, said:
"The Supervisory Board has thoroughly and thoroughly examined this
transaction and approved it unanimously, considering that it would be
good for all stakeholders.
For customers: it will accelerate the transformation of Publicis
making it a more relevant and competitive partner.
For talent: in a highly competitive environment for talent,
Publicis will be able to benefit from remarkable leadership
team, 3,700 data scientists and large technology and artificial teams
intelligence experts.
For our shareholders: the transaction, which was not planned, has a lot
deserves from a financial point of view. The price is right, the
the transaction is the EPS stock and free cash flow generating at least two digits
level it gives a better growth profile and a new and better
balanced combination of products and revenues. Therefore, it will generate value
creation that will greatly benefit our shareholders.
The Supervisory Board was convinced by the approach of the
Executive Board and its Chairman and CEO, Arthur Sadoun, on integration.
The plan is reasonable and should lead to seamless integration with
strong growth potential and cost synergies. We are confident that the
This plan will deliver the expected results on services, growth and
synergies. "
Epsilon: a technological leader maximizing the
value of its customers' data across
Based in the United States, Epsilon is a unique technology and platform.
company focused on maximizing the value of its customers' data. In 2018,
Epsilon generated $ 1.9 billion in net revenues (3), 97% in the
United States. Epsilon employs approximately 9,000 people, including
3,700 data scientists and 2,000 technologies made available in Bangalore
experts.
Epsilon's expertise spans the entire data lifecycle from the customer
first-party raw data to personalized marketing campaigns, using
technology, data and platforms for:
-
On board customer first user data using the exclusive property of Epsilon.
software suite (customer relationship management, email and loyalty programs) to create a clean environment,
standardized and organized data set -
Enrich customer proprietary data with proprietary Epsilon data
Active (demographic and contact, behavioral and transactional, online
and offline data) -
Build a unique identifier customer profiles based on enriched data and
Artificial intelligence for segmentation and analysis -
Enable data deliver customized multichannel campaigns to
scale with measurement and optimization in real time
The success of Epsilon is attested by the approval of its blue chip
Customer:
-
Epsilon has won the trust of at least 7 of the 10 largest US companies.
companies in various sectors, including automotive, retail,
Services, CPG and Media -
In addition, its top 50 clients have an average term of 14 years and
have generated an average annual growth of 8% in the last two years,
demonstrating the significant benefits to customers provided by Epsilon.
Epsilon has built its strengths in technology, data and platforms to a
impressive scale. For example, its loyalty software serves 600 million
accounts it has more than 250 million unique consumers identified in
the United States and its proprietary platforms Aware manage 1 billion
updates every 5 minutes to further improve messaging based on
consumer insights in real time.
Epsilon has developed an extremely powerful artificial intelligence
capabilities to predict consumer behavior.
In a world where data privacy is paramount, Epsilon remains at the forefront
the vanguard of consumer privacy, cybersecurity and risk management
compliance is important.
Bryan Kennedy, CEO of Epsilon, said:
"We are delighted to join the Publicis Groupe family. Over vast
discussions with the Publicis management team during the recent review
process, we found a strong middle ground, including shared values and a
strong vision for the future of data-driven and digital marketing.
Our discussions have highlighted the undeniable market opportunity that
the combination of our complementary offers would represent. I strongly
believe that joining Publicis will benefit the companies Epsilon and Conversant.
people and bring great value and new opportunity to customers we
serve. "
An acceleration of Publicis strategy for
become the preferred partner of customers in their transformation
In today's rapidly changing environment, customers are changing their
investments in data / technology driven marketing solutions
enable them to foster customer engagement, support growth and reduce
fresh.
Publicis clearly has the ambition to combine creativity, data and
technology to meet the needs of its customers and become a leader
marketing and business transformation. This model wins
as evidenced by the leading position of Publicis Groupe in New Business
ranking in 2018 and the growth of its "Game Changers".
The acquisition of Epsilon is today a unique opportunity to
accelerate the implementation of Publicis' strategy to
personalized experience on the scale.
With Epsilon at the base, Publicis will become the first player to offer
a unique end-to-end service to its customers. This will result in an improvement
growth of its existing activities while opening up new opportunities in
an expanded industry of $ 1.5 trillion.
Epsilon will feed the entire Publicis organization by completing its
Existing solutions and boost its Game Changers:
-
On the creative side, Epsilon's assets will help customers better understand
improve ideas and build more relevant campaigns. By feeding the
Dynamic creation engine, Publicis goes even further to adapt to
Real-time customer context (who they are, what they do, what they do
buy) -
On the media side, the connection between the Epsilon datasets and
Billions of Publicis Media contact points will provide
intelligence to build consumer IDs, segment audiences and maximize
return on investment by measuring and optimizing campaigns accurately
real time -
On the digital transformation side, Epsilon will allow
Publicis will provide in-depth information on its clients in order to
optimize the business model of customers
Conversely, the potential of Epsilon will be fully released within Publicis
Group, thanks to well identified levers of value creation. In particular,
Epsilon will benefit from Publicis' client portfolio and global reach for
continue to expand in the United States and abroad. Publicis also intends to
replicate the success of Epsilon's unique Auto platform with others
verticals (such as health, financial services, telecommunications,
Retail).
Attractive and attractive trading conditions
creating value for shareholders
Under the terms of the agreed transaction, Publicis Groupe will acquire
Epsilon for a cash consideration of $ 4.40 billion, representing a
purchase price of $ 3.95 billion after deducting income from
increased taxes related to acquisitions. This implies a multiple of 8.2x, based on
Adjusted EBITDA for 2018 (1) $ 485 million.
The transaction will generate two figures for Publicis EPS revenue.
and free cash flow per share (2) from the first year (2020). As
illustration, based on 2018 Pro-Forma figures, title Accretion of EPS
would be equal to + 12.5% (4) and accretion of FCF + 16.5% (5),
excluding transaction-related synergies.
Publicis remains committed to its dividend payout ratio of 45% and will
pending its share buyback program as part of this acquisition.
The transaction will be fully financed with debt and cash,
Maintaining a financial profile in accordance with the current BBB + / Baa2
with complete deleveraging four years after the completion of the
transaction.
The transaction remains subject to customary approvals and is expected
close in the third quarter of 2019.
advisors
Allen & Company LLC, BNP Paribas, Citi and J.P. Morgan acted as
financial advisers and Wachtell, Lipton, Rosen & Katz acts as
Legal Counsel of Publicis Groupe.
teleconferences
Monday, April 15, 2019 at 8:00 am CET / 2:00 pm ET and at 2:00 pm
CET / 8:00 AM Publicis Groupe and Epsilon to Host Webcast
presentations to discuss the transaction. Links to the webcast and
The accompanying documents will be available on the Publicis Groupe Investor Website.
Relationship site.
This press release contains inside information within the meaning of
Article 7 of Regulation (EU) No 596/2014
About Publicis Groupe – The Power of One
Publicis Groupe (Euronext Paris FR0000130577, CAC 40) is a world leader
in marketing, communication and digital transformation, driven by
the alchemy of creativity and technology. Publicis Groupe offers its
customers transparent access to its tools and expertise through
offer. Publicis Groupe is organized into four solutions
hubs: Publicis Communications (Publicis Worldwide, Saatchi & Saatchi,
Leo Burnett, BBH, Marcel, Fallon, MSL, Prodigious), Publicis
Media (Starcom, Zenith, Spark Foundry, Blue 449, Performics, Digitas),
Publicis Sapient and Publicis Health. Present in more than 100 countries,
Publicis Groupe employs nearly 75,000 professionals.
www.publicisgroupe.com |
Twitter: @PublicisGroupe | Facebook | LinkedIn | Youtube |
Viva the difference!
Warning
Certain information contained in this document, other than historical
Such information may constitute forward-looking statements or unaudited information.
Financial forecast. These forward-looking statements and forecasts are
subject to risks and uncertainties that could result in actual results
differ materially from those projected. These forward-looking statements
and the forecasts are presented as of the date of this document and other
in accordance with applicable laws, Publicis Groupe assumes no liability
obligation to update them to reflect new information or events or to
any other reason. Publicis Groupe urges you to carefully review the
risk factors that could affect its business, as set out in the
Reference document filed with the French Market Authority
Financiers (AMF) and available on the Publicis website
Group (www.publicisgroupe.com),
including an unfavorable economic climate, extremely competitive competition
market, the possibility that our customers are seeking to end their activities
their contracts with us in the short term, the fact that an important
Part of the Group's revenue comes from certain key customers,
conflicts of interest between advertisers active in the same sector, the
Dependence of the group on its directors and employees, laws and regulations
which apply to the Group's activities, a legal action brought against
Group on the basis of allegations that some of its commercials are
misleading or misleading or that the products of certain customers are
defective, the acquisition growth strategy, the
impairment of goodwill and assets included in the Group's balance sheet,
the Group's presence in emerging markets, exposure to liquidity risk,
downgrade of the group's credit rating and its exposure to the risk of financial losses.
markets.
|
1. |
EBITDA of Epsilon released in 2018 adjusted to account for autonomous carver fees |
|
2 |
EPS and FCF headset on a fully diluted basis. |
|
3 |
According to the accounting principles of Publicis Groupe |
|
4 |
EPS adjusted for self-sustaining waiver costs and rate of return cost |
|
5 |
FCF per share reflecting the adjustments above, as well as the annual tax |
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