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Accenture (ACN) Inks Deal to Snap Up Creative Agency Droga5

Zacks Equity Research

Accenture plc ACN announced yesterday that it has inked a deal to acquire New York-based creative agency — Droga5.

More than 500 Droga5 employees will be absorbed into the fast-growing Accenture Interactive business. David Droga will continue as creative chairman with Sarah Thompson and Bill Scott staying as global CEO and U.K. CEO, respectively.

Founded in 2006, Droga5 is known for campaigns for brands like Alphabet’s GOOGL Google, Under Armour UAA, Dine Brands Global’s DIN IHOP, HBO and The New York Times.

Although Accenture did not reveal the value of the transaction, it has reportedly bought a 49% stake in Droga5 that was previously owned by media holding company — Endeavor.

Accenture stated that Droga5 is the largest acquisition since its inception in 2009. Shares of the company have gained 25.7% year to date, outperforming the 21.7% rally of the industry it belongs to.

 

 

Our Take

We believe that the acquisition will enable Accenture to expand its advertising creative business, specifically around "experiential marketing," which encompasses custom events, executions and partnerships to help people become familiar with a brand.

Accenture is strengthening its digital marketing capabilities through frequent acquisitions. Last year, Accenture Interactive made nine acquisitions (Kaplan, Kolle Rebbe, Adaptly, New Content, MXM, Mackevision, HO Communication, Rothco and Altima). Last month, it acquired digital marketing agency, Storm Digital and creative agency Hjaltelin Stahl.

Accenture Interactive’s well-integrated platform enables CMOs to devise marketing strategies and derive higher ROI (return on investment). Considering the growing need for digital marketing, we expect Accenture’s continued investment in digital and marketing capabilities to keep it at par with fast-changing needs of today’s CMOs.

Currently, Accenture has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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