The French advertising giant Publicis Groupe said on Monday that it had agreed to pay $3.7 billion in cash for Sapient, a marketing and consulting company based in Boston, as it seeks to become a stronger digital competitor against Internet powerhouses like Google and Facebook.
Publicis, based in Paris, will pay $25 a share for Sapient, 44 percent above its closing price on Friday, the companies said in a joint statement. They said they had agreed to build a joint platform called Publicis.Sapient focusing “exclusively on digital transformation and the dynamics of an always-on world across marketing, omni-channel commerce, consulting and technology.”
The boards of both companies have unanimously recommended the deal.
The announcement came less than six months after the collapse of the proposed merger of Publicis with Omnicom, a $35 billion deal that would have created the world’s largest advertising agency, surpassing WPP. Combining the two large companies presented a host of tax and legal complications, as well as cultural differences, that proved too difficult to overcome.
The context for both deals is the fact that companies like Yahoo, Google and Facebook are revolutionizing the advertising business, gobbling up an ever-greater chunk of digital spending. The overwhelming information advantage the Internet companies have on consumer browsing habits has helped them in the growing online ad market, even as the traditional media that the agencies long depended on lose their sparkle.
The traditional advertising companies and global tech giants are fighting over an increasingly large online market.
“Sapient was the largest independent digital ad agency left in the marketplace,” said Claudio Aspesi, a media analyst at Sanford C. Bernstein & Company. “There is very little left for competitors to catch up with Publicis on digital. They were certainly the leader already, and more markedly so after this deal.”
Sapient, a Nasdaq-traded company founded in 1990, is in the business of providing corporations with consulting and support services, including in the fields of finance, retail, technology, energy and government. That includes viral marketing campaigns, smartphone applications and websites for companies like Coca-Cola, Audi and Target.
Sapient had revenue of about $1.4 billion in the first six months of the year. Publicis had 2013 revenue of just under 7 billion euros, or about $8.7 billion.
Maurice Lévy, chairman and chief executive of Publicis, described Sapient in the statement as “a one-of-a-kind company born in the technology space with strengths in marketing, communications, consulting and omni-channel commerce.”
Publicis currently generates around 40 percent of its revenue from its digital operations, according to Ian Whittaker, an analyst at Liberum Capital in London.
But Publicis’s gains in digital advertising have come at a price. Before the latest deal, Mr. Lévy had spent about $3.4 billion since 2007 snapping up digital properties. That includes $530 million for Razorfish, a pioneering Web ad company, in 2009. The Sapient deal will consume most of the $4 billion that Mr. Lévy said last year Publicis was setting aside for acquisitions.
Publicis shares closed down 2.26 percent, or $1.25, to $54.02 in trading in Paris, having fallen almost 5 percent earlier in the day. Shares of Sapient jumped 42 percent, or $7.28, to $$24.60.
Sapient’s chief executive and co-chairman, Alan J. Herrick, is to lead the Publicis.Sapient business. Jerry A. Greenberg, Sapient’s other co-chairman, would join Publicis’s supervisory board.
The deal, first reported late Sunday by The Wall Street Journal, is expected to close before March 31, the executives said, and is contingent on antitrust and other regulatory clearances.
David Jolly reported from Paris and Mark Scott from London.