Aegis to acquire Chinese digital agency, Catch Stone, for initial consideration of £55.2m

Aegis Group plc is to acquire Beijing Catch Stone Advertising Co., Ltd and the business of Shanghai Catch Stone Culture Media Co., Ltd, an established full service digital media and marketing agency in China, for an initial consideration of RMB 550 million (£55.2 million). Catch Stone will form a separate network brand for Aegis Media in China.

Catch Stone is an established digital agency in China. Its capabilities include digital media planning and buying as well as a range of digital marketing services in areas including creative origination and social media. Catch Stone is a leading media buying agency operating across China with a particular specialism in the automotive and financial services sectors. It has a strong mix of multi-national and local clients in these sectors, including Audi, Nissan, Saic GM Wuling (SGMW), Industrial Bank and Inoherb. Catch Stone was formed in 2002 and now employs over 130 people in Beijing, Shanghai and Guangzhou.

The acquisition is subject to a four year earn-out structure, from 2013 to 2016 inclusive, with further annual consideration payments being made during this period, dependent on the level of future profit growth achieved. The total consideration for the acquisition by 2016 is expected to be around RMB 949.4 million (£95.2 million). If Catch Stone significantly outperforms current forecasts, the total consideration could be higher with a cap on the maximum amount payable of RMB 1.5 billion (£150.4 million). All consideration payments will be satisfied in cash.

The unaudited profit before tax of Catch Stone for the year ended 31 December 2011 was RMB 81 million (£8.1 million) and the value of the gross assets at that time was RMB RMB 375.9 million (£37.7 million).

The RMB: £ exchange rate used in this article is RMB 9.9724: £1.

UK, London & China, Beijing

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