Publicis Group SA, the third-largest advertising company, said it agreed to buy China’s Genedigi Group to become the largest public relations network in the country.
Genedigi has 400 employees and offices in Beijing, Shanghai and Guangzhou, Publicis said in a statement today. The Chinese company has more than 50 clients in the automotive, consumer goods, technology and financial services industries and offers public relations, event marketing, digital marketing and market research services.
Publicis, with clients including Procter & Gamble Co. and Wal-Mart Stores Inc., has announced the acquisitions of more than a dozen companies so far this year, almost matching the number of 2010 deals, according to Bloomberg data. Genedigi will be at least the third agency addition in China in 2011. In addition to emerging markets, Paris-based Publicis is also aiming to bolster faster-growing offerings, such as online marketing, and its business in emerging markets.
“Their Chinese organic revenue performance looks quite tame when you compare it with the growth in the advertising market in China and the performance of some of their peers,” said Ian Whittaker, a London-based analyst at Liberum Capital. The deal “is part of their plan to revamp their Chinese operations.”
Publicis’s revenue and profit are recovering, freeing up cash for acquisitions, after a global recession cut into companies’ advertising budgets in 2009. The company’s sales rose 20 percent to 5.4 billion euros ($7.7 billion) last year.
The stock rose 1 cent to 38.29 euros in Paris trading at the close of trading in Paris, valuing the company at 7.34 billion euros. The stock has declined 1.8 percent this year.
Genedigi, founded in 1997, will be added to the MSLGroup branch of Publicis. Financial terms of the deal were not disclosed.
Publicis rival WPP Plc, the world’s largest advertising company, has said it will more than double its spending on acquisitions with an emphasis on emerging markets, such as Asia.
“All these firms are looking for acquisitions,” said Whittaker, who advises investors to buy Publicis. “If you think someone else is going to come in and buy the asset, and you think it’s a high-quality asset, you have to get in and spend some cash.”