Publicis' $4.4 billion acquisition leaves analysts skeptical

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Analysts wonder how well Publicis will be able to integrate the data marketing company.

Analysts are skeptical about Publicis Groupe's plans to buy data marketing firm Epsilon for $4.4 billion, noting past integration struggles and a questionable strategic fit.

"You just take this number and you understand why there is no way for our client to continue to grow profitably if they don't deliver personalized experience at scale," he said."If they're not able to touch those people within those 900 points in the right way with the right message at the right time and with the right offer. When you start there, you understand why our clients are so interested in Epsilon.

Barclays analysts said in a note this deal gives Publicis first-party data on U.S. customers, but questioned how useful they would be."At first sight, Epsilon does not seem to fit Publicis' strategy that well." But Liberum noted the price was also"much cheaper" than $5 billion suggested in press reports,"which suggests competition for the asset was maybe not as much as expected ."

"We do know that in the beginning there were lots of players," Sadoun countered,"and we do know in the end there were around three." "I know you've been talking about doing share buybacks this year — if you compare your valuation versus Epsilon, it seems like you should be buying back your stock if you had the same type of growth expectations you had at the beginning of the year," he said."I just sort of wonder why do this deal given that you should be buying back your own shares.

 

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