By George P. Slefo

Publicis Groupe is acquiring data marketing giant Epsilon in a $4.4 billion deal, the holding company announced Sunday. The transaction is expected to close in the third quarter.

“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,” Publicis Groupe Chairman-CEO Arthur Sadoun said in a statement, adding that the deal would help Publicis “deliver personalized experiences at scale” for its clients.

Under the terms of Publicis’ deal, the holding company will acquire Epsilon for a cash consideration of $4.4 billion, representing a net purchase price of $3.95 billion “after deducting the benefit of acquisition-related tax step-up,” according to the statement.

The Epsilon sale is the biggest agency deal in years, coming close to Dentsu Inc.’s $4.9 billion acquisition of Aegis Group in 2013 (the largest-ever acquisition of an agency company) and WPP’s $4.37 billion purchase of Young & Rubicam in 2000. (WPP announced Y&R as a $4.7 billion transaction, but final value of stock in that all-stock deal was $4.37 billion.) Even so, a takeover by Publicis won’t change the top of the agency company rankings. Publicis will continue as the world’s third-largest agency company, behind WPP and Omnicom Group.

Epsilon, which has been owned by Irving, Texas-based Alliance Data Systems since 2004, is ranked as the world’s 13th-largest agency company, according to Ad Age Datacenter. In the statement Sunday, Publicis said Epsilon had $1.9 billion in net revenue in 2018, with 97 percent of that from the U.S. Epsilon has 9,000 employees, including 3,700 data scientists.

Epsilon’s loyalty software serves 600 million accounts and it “has more than 250 million unique consumers identified in the US, and its proprietary platforms Conversant handle 1 billion updates every 5 minutes allowing to further improve messaging based on consumer insights on a real time basis,” according to the Publicis statement.

The deal for the email and data marketing juggernaut comes after Alliance Data last November said it was “exploring strategic alternatives for its Epsilon business,” including “a potential sale of the business.” Other parties that expressed interest in Epsilon included Goldman Sachs.

Bryan Kennedy, CEO of Epsilon, in a statement said: “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.”

The Publicis deal follows Interpublic Group of Cos.’ October acquisition of another data venture, Acxiom, for $2.3 billion.

The transaction comes as Publicis grapples with changes in the ad market amid the decline of traditional advertising, shifts in digital, cost pressure from clients and competitive challenges from consultancies.

The current landscape among industry leaders places a high premium on having first-party data assets, which are significantly more accurate than third-party data and allow marketers to create personalized, targeted ads that often boost higher conversions.

The acquisition gives Publicis an arsenal of tools that could …read more

Via:: Ad Age B to B