Publicis to buy Alliance Data’s Epsilon for $4.4 billion

Publicis and other traditional advertisers have been losing ground in a marketplace increasingly dominated by Facebook, Google and digital marketing specialists that track and target individual clients via their smartphones.

The French group’s shares sagged after a fourth-quarter earnings miss in February and have fallen 15 percent in total over the past 12 months.

The Epsilon purchase is “a very significant investment for a company of our size”, Publicis CEO Arthur Sadoun said. “But we’re convinced it’s the right move ... in a world where data is at the heart of all decisions and the mobile phone has become our main interface.”

Epsilon, which brings a trove of data on some 160 million individual clients, generated revenue of $1.9 billion last year, almost entirely in the United States.

The $4.4 billion cash price amounts to $3.95 billion excluding tax, or 8.2 times Epsilon’s 2018 earnings before interest, tax, depreciation and amortization (EBITDA), Publicis said.

The French company said it would cancel a previously announced share buyback and finance the Epsilon deal with debt, adding that the acquisition would be earnings- and cash flow-accretive from next year onwards.