Fusion Corporate Partners

Alterian (LSE: ALN) has acquired Intrepid, an international market research and social media analytics consultancy. The price paid was for $11 million according to some reports.

Intrepid is a consulting business with a heavy focus on providing insights using social media data, enabling social media to be integrated as a core element of mainstream marketing.  The company has around 40 staff, and offices in Seattle and London as well as a rapidly growing social media analytics team in Ho Chi Minh City, Vietnam. Intrepid is a long standing user of Alterian’s social media monitoring and analytics product, Alterian SM2.

The acquisition of Intrepid allows Alterian to expand its support for clients and partners in the area of social media  marketing. Alterian has seen growing demand from brands and partners for packaged social media solutions that include best practices, services and software, delivering benefit even where the partner or brand does not have the in-house staff to use the software and generate insights directly.

Alterian CEO, David Eldridge, commented: “With the explosion of social media, many brands are well aware of the need to harness this exciting new channel as a key and integral part of their marketing mix.  However, a large proportion do not yet have the necessary in-house skills to use social media analytics to best effect.  The addition of Intrepid into the Alterian portfolio gives our partners and customers access to an extremely talented group of people with a deep track record in social media analytics and market research,” said Eldridge. “It also strengthens our leadership position in social marketing, one of our fastest-growing areas of the business, as we help marketers address new channels and build engaging dialogues with their customers.”

John Song, founder and CEO of Intrepid, added: “We believe this acquisition will have a positive effect on all of Alterian’s current business lines and will accelerate our ability to help organizations that know they must move quickly to integrate social marketing into their customer engagement activities, but may not have the necessary resources and methodologies to do so. Our vision and our company culture align perfectly with Alterian, and we are excited to become part of this fast-growing company.

UK, London

Crown Business Communications, one of the UK’s leading communications agencies, has agreed terms for the acquisition of business and key staff from Acclaim, specialists in audience engagement and brand communications. The deal will propel Crown into the top 5 UK agencies in the corporate communications sector.

Commenting on the deal, Crown’s Managing Director Nicky Havelaar said: “acquiring the Acclaim business was a good opportunity for us because there’s a good cultural and business fit. They have a talented team and an excellent client list. We are pleased to be able to offer continuity of business to the contracts in progress. We’re looking forward to bringing Acclaim people on board and working with them to provide even smarter and more creative communications solutions for our combined client list.”

Havelaar will remain Managing Director of the enhanced Crown, while Acclaim’s Managing Director Simon Hambley will become Sales Director. 

Hambley said: “I’ve known of Crown for a long time and admire their work. I’m confident that our people will transition smoothly into their organisation and we’ll move forward together to provide an even better service for our clients in the future.”

UK, London

Publicis Groupe has acquired G4, a Bejing-based full-service advertising agency. Effective immediately, the agency will rebrand as Publicis G4, and will be joined by the Publicis Beijing Nestlé team to service Nestlé throughout Greater China.

Current G4 Managing Director, Laurent Beloeuvre, will head the new entity, and will have the additional role of Greater China Director on the Nestlé account. Launched in 2009, G4 with 28 advertising professionals offers design and creative expertise, event management and consulting for Nestlé in China.

China has one of the most dynamic and fastest-growing advertising markets in the world. According to ZenithOptimedia forecasts (March 2010), the Chinese ad market is expected to grow by 11.5% in 2010. Publicis Groupe is present in China through all of its global networks. The Groupe employs more than 3,700 professionals throughout more than 50 cities (including Beijing, Shanghai, Chengdu, and Guangzhou).

France, Paris

Publicis Groupe has signed an agreement to acquire AG2, one of the largest independent digital agencies in Brazil. The agency will be aligned with Publicis Modem, the digital arm of the Publicis Worldwide global network, and will be renamed AG2 Publicis Modem. Cesar Paz, CEO of AG2, will continue to lead the agency, and will now report to Orlando Marques, CEO of Publicis Brazil.

Headquartered in Porto Alegre with offices in São Paulo and Pelotas, AG2 employs approximately 170 communications specialists. Since its launch in 1999, the agency has established itself as a national leader in interactive experiences. AG2’s core expertise is competitive intelligence, a competence that boosts its other two: brand management and interactive experiences. Major clients include General Motors, Bradesco (one of the biggest banks in Brazil), Embraer, and Bunge Group.

The acquisition of AG2 illustrates Publicis Groupe’s continued commitment to investing in digital and high-growth markets. AG2 is the most recent addition to the Publicis Modem digital network. Publicis Modem currently employs approximately 1,400 professionals and has 40 offices around the world.

According to ZenithOptimedia adspend forecasts (July 2010), the Brazilian ad market expanded rapidly during the five years leading to 2008. All media performed well, but online is the clear winner: between 2004 and 2008, the online market grew by at least 40% each year. Because marketing budgets were slashed last year, overall estimated growth slowed in 2009, but is poised to recover rapidly. Brazil is still considered one of the most promising advertising markets in the world.

Publicis Groupe has nearly 750 employees in Brazil. The Groupe is present through its brands Publicis Worldwide, Saatchi & Saatchi, Leo Burnett, VivaKi (Digitas, Razorfish, Starcom MediaVest Group, ZenithOptimedia), and MS&LGroup.

France, Paris

Aegis Group plc and Mitchell Communication Group  have entered into a Merger Implementation Agreement (“MIA”) under which it is proposed that Aegis will acquire all of the issued capital in Mitchell for approximately A$363 million (based on the cash consideration of A$1.20 per Mitchell share and including options and performance rights). Mitchell shareholders may elect to receive their consideration in cash, or Aegis shares, or a combination of both. This equates to a total of approximately £207 million, as per the A$:£ exchange rate on 28 July 2010 of A$1.75:£1. In addition, in the event the transaction is approved, Mitchell shareholders will receive the benefit of a fully franked Mitchell dividend in respect of the year ended 30 June 2010 of A$0.05 per share. The Mitchell Board has also resolved to suspend the Mitchell Dividend Reinvestment Plan.

The acquisition will be implemented by way of a Scheme of Arrangement (“Scheme”) under which Mitchell shareholders can elect to receive either A$1.20 cash per Mitchell share, or Aegis shares, or a combination of the two. The scrip component of the offer will be based on the ratio of 40 Aegis shares for every 67 Mitchell shares held, with a cap on the overall quantum of Aegis scrip to be offered of up to 9.9% of Aegis’ share capital. Full details of the cash and scrip election mechanism will be set out in the Explanatory Memorandum for the Scheme, scheduled for distribution in September.

The offer represents a premium of:

– 15.4% to the last closing price of Mitchell shares prior to this announcement on 28 July 2010;
– 30.7% to the three-month Volume Weighted Average Price (“VWAP”) of Mitchell up to the close of trade on 28 July 2010; and
– 33.8% to the six-month VWAP of Mitchell up to the close of trade on 28 July 2010.

Aegis Group plc is one of the world’s leading marketing communications groups, operating in 82 countries around the world, and in the year to 31 December 2009 made underlying operating profit of £170.3 million on revenue of £1.35 billion. Mitchell is Australia’s largest marketing communications group and in the year to 30 June 2009 reported profit before tax of A$27.4 million on revenue of A$225.2 million. As at 31 December 2009 Mitchell had gross assets of A$508.3 million.

The Board of Directors of Mitchell unanimously recommends shareholders accept and vote in favour of the Scheme, in the absence of a superior proposal and subject to an Independent Expert concluding that the Scheme is in the best interests of Mitchell shareholders. Harold Mitchell, founder and Executive Chairman of Mitchell, and his immediate family (together being 40% shareholders in Mitchell) along with each of the other Directors of Mitchell, intend to vote or cause to be voted all of their direct and indirect interests in Mitchell in favour of the Scheme, in the absence of a superior proposal and subject to an Independent Expert concluding that the Scheme is in the best interests of Mitchell shareholders.

If the Scheme is implemented, Mr Mitchell, being a 30% shareholder, intends to take his consideration in Aegis shares, becoming a significant shareholder in Aegis. He has further undertaken not to dispose of 85% of the shares he receives in relation to this transaction for a period of 24 months after the date that they are issued to him. Mr Mitchell also intends to lead the combined Aegis Media Pacific business as Chairman.

Aegis has reached agreement with Mr. Mitchell under which Aegis has an option to acquire from him 19.9% of the issued share capital of Mitchell – part of his 30% shareholding – for Aegis shares, at the same ratio as proposed to be offered under the Scheme. Any Aegis shares issued under the option agreement will form part of the Aegis shares otherwise available under the Scheme. Details of this agreement will be disclosed in a substantial holder notice to be lodged by Aegis with ASX.

Jerry Buhlmann, Aegis Group Chief Executive Officer, said:

“We are pleased to announce that we have reached agreement to buy Mitchell, which is a hugely successful company with a strong track record of profitable growth driven by its market-leading positions in both traditional and digital media.

“Mitchell is the leading marketing communications group in Australia, the eighth largest ad spend market in the world, and this acquisition is a further step in transforming Aegis’ operations in the Asia-Pacific region. Our businesses are a strong strategic and cultural fit. Combining Mitchell with our existing business in Australia will create a formidable business for the benefit of all our clients and position us for continued strong growth in the most dynamic region in the world.

“The proposed acquisition will be earnings accretive for Aegis and will enhance the return on invested capital in the first full year post combination.”

Harold Mitchell, Mitchell Communication Group Executive Chairman, said:

“I am delighted that we have reached agreement with Aegis over a deal which I believe is in the best interests of our people, our clients and our shareholders.

“Aegis is the best placed of the global agency groups for the convergent future, with a strong focus on digital and media. We are convinced they have enormous growth ahead of them and having Mitchell as part of their global network will be an important part of achieving that. That is why I intend to become a significant shareholder in Aegis if the transaction is approved.”

Details of the Agreement

Under the Scheme, Mitchell shareholders will receive total consideration of A$1.20 cash for each Mitchell share held, or 40 Aegis shares for every 67 Mitchell shares held, or a combination of both. In addition, subject to approval of the transaction, Mitchell shareholders will receive the benefit of a fully franked Mitchell dividend in respect of the year ended 30 June 2010 of A$0.05 per share. Mitchell will announce further details of the timing of dividend payments with the announcement of its full year financial results for the year to 30 June 2010.

Mitchell shareholders can elect to receive either cash, or Aegis shares, or a combination of the two. The scrip component of the offer will be based on the ratio of 40 Aegis shares for every 67 Mitchell shares held, with a cap on the overall quantum of Aegis scrip to be offered (whether under the Scheme or under the option agreement with Harold Mitchell) of up to 9.9% of Aegis share capital. Full details of the cash and scrip election mechanism will be set out in the Explanatory Memorandum for the Scheme.

The transaction is subject to a number of conditions, including court approval and Mitchell shareholder approval. The key terms and conditions of the Merger Implementation Agreement are summarised later in this announcement.

The cash component of the acquisition will be funded by Aegis from internal resources.

An Explanatory Memorandum with full details of the transaction, including an Independent Expert’s Report, is expected to be dispatched to Mitchell shareholders in September 2010. The shareholder meeting to approve the Scheme is expected to be held in October 2010. A more detailed timetable for the approval and implementation of the transaction will be announced in due course.

Aegis was advised by Greenhill, Slaughter and May and Freehills. Mitchell was advised by ANZ Mergers and Acquisitions and Mallesons Stephen Jaques.

UK, London