Sapient Corp. Buys Nitro
Opening the possibility of an “ad agency as target” buying trend, Sapient bought the advertising firm for $50 million in cash and stock.
June 17, 2009
Over the past year, technology companies have been active acquirers of a glut of new media and digital advertising companies that have challenged the business model of traditional advertising agencies.
Notably absent from the M&A space have been traditional advertising agencies, as many agencies suffered from over-leveraged balance sheets or took a decidedly “very conservative,” acquisition strategy, as Omnicom Group chief executive John Wren mentioned during the firm’s July conference call.
Finally, that conservative strategy has caught up with the laggard industry. On Wednesday, marketer Sapient Corp., agreed to buy Nitro Group for about $50 million in a cash and stock transaction. The transaction opens the door to a new dynamic wherein advertising agencies are no longer seen as the likely acquirers of digital players, but perhaps the target.
The Boston, Massachusetts-based marketing firm believes Nitro, a New York-based advertising agency that has increasingly focused on online media, can meet the diverse needs of its clients.
In a statement, Sapient executive director and worldwide creative officer Gaston Legorburu said, “Clients want a fully integrated, strategically led and digitally enabled agency.” Sapient employs about 5,900 and had $687 million in 2008 revenue.
Until recently, tech companies have been the most active buyers. In April 2007, Google bought DoubleClick from San Francisco-based private equity firm Hellman & Friedman for $3.1 billion in cash. In May 2007, Microsoft acquired advertising network aQuantive for about $6 billion, at an 85% premium. In the same month, AOL purchased a controlling stake in the German online ad-serving company Adtech.
The acquisition of Nitro is expected to close within a month, the companies said. Sapient closed at $6.13 per share on Wednesday. Calls placed to Sapient and Nitro were not returned by press time.
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