July 2018: Knowledge Economy M&A and Equity Market Update

By Ramone Param, Director, Equiteq

  • Major deals profiled include IPG’s acquisition of Acxiom Marketing Solutions, S4 Capital’s acquisition of MediaMonks and Accenture’s acquisition of Kogentix.
  • The Equiteq Knowledge Economy Share Price Index was broadly flat over the month.

IPG’s acquisition of Acxiom Marketing Solutions gives it access to anonymized customer data to enhance its targeted marketing solutions

Target: Acxiom Marketing Solutions (AMS) is Acxiom’s legacy data management business. It consists of a team of 2,100 people and represents about three quarters of Acxiom’s total revenue.

Buyer: Interpublic Group (IPG) is one of the leading networks of advertising agencies.

Deal Value: $2.3bn

Deal Insight: At the beginning of July, the Wall Street Journal reported that Dentsu and IPG were both expected to submit offers to acquire part of Acxiom. IPG followed with its announced acquisition of AMS, which gave it access to customer data that can drive more targeted marketing campaigns for its clients. The deal comes as the leading marketing agencies are coming under pressure from major consultancies and technology firms entering the digital media space. These more recent entrants are utilizing strong data analytics solutions to build effective advertising campaigns.

Data ethics has become an important issue with the adoption of GDPR in Europe and the controversies surrounding Facebook and Cambridge Analytica. Acxiom is considered to have a strong reputation in data integrity, which will have supported the strategic nature of this deal and premium valuation metrics. AMS was part of Acxiom’s Marketing Services and Audience Solutions segments, which generated total revenue of $706m in the year to March 2018.

Newly formed S4 Capital acquires digital agency MediaMonks and is raising new capital for further M&A

Target: MediaMonks is a Dutch digital media agency with 750 staff across the globe.

Buyer: S4 Capital is a recently founded vehicle, which is being used to develop technology, data and content.

Deal Value: c.$350m (2.7x revenue)

Deal Insight: S4 Capital was founded by Sir Martin Sorrell after he recently resigned as CEO of WPP. The resignation followed an internal investigation into alleged improper behavior and misuse of assets at the firm. S4 Capital’s acquisition of Media Monks marks its first acquisition. S4 Capital is seeking to issue new shares worth up to £1bn, which are expected to fund future acquisitions.

WPP was considering MediaMonks as an acquisition opportunity while Sorrell was CEO. WPP has since claimed that they believe Sorrell had used proprietary information gathered at WPP to structure S4 Capital’s deal with MediaMonks. As such, Sorrell could lose his good leaver status, which entitles him to future share bonus payments.

Accenture adds to its Applied Intelligence business with acquisition of Kogentix

Target: Kogentix is a US-based provider of big data, AI services and related solutions. It has a team of c.220 big data engineers, scientists, machine learning engineers and software developers.

Buyer: Accenture is a leading global technology services firm.

Deal Insight: The acquisition strengthens Accenture’s data engineering business, as consulting clients continue to seek advanced analytics solutions that can enhance revenue and reduce cost. Accenture’s Applied Intelligence practice employs over 6,000 data scientists, engineers and artificial intelligence professionals globally. The acquisition of Kogentix complements Accenture’s recent acquisition of Real Team Analytics Platform, a data visualization platform for analyzing and authenticating bulk data. The deal also complements the buyer’s acquisition of Meredith Xcelerated Marketing, a marketing agency that is known for its strong data and analytics skills.

Selected Knowledge Economy M&A announced in July:

Equiteq Knowledge Economy Share Price Index:

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