Ireland-based advertising agency WPP Group Plc. (WPPGY) recently declared that it has acquired an 87.76% stake in France-based, Press Index S.A. The acquisition was carried out through the company’s information, insight and consultancy services entity, Kantar.
In addition, the company will also initiate a cash tender offer through its wholly-owned subsidiary Kantar to acquire the remaining shares of Press Index. Press Index, established in 1997, specializes in offering media monitoring services to its clients and currently has a staff strength of 210 people. As of 31 December 2011, the agency generated revenues of EUR 17.5 million and had EUR 12 million in gross assets.
The company through this acquisition has stepped forward to expand its reach in the European market. In the first 5 months of 2012, WPP Plc’s wholly-owned operating companies carried out a series of acquisitions. Among these, Kantar’s $1.2 million investment in Enprecis, Burson-Marsteller’s acquisition of assets of Crowdverb and Carnation Internet Tanácsadó Zrt deserve special mention.
In addition, lately, WPP Plc also agreed to acquire a 70% stake in Brazil-based leading digital agency, Foster Informatica, Ltda through its global advertising and communications unit, Ogilvy & Mather for an undisclosed amount. The series of acquisitions are likely to provide a major competitive advantage to the company and expected to have a positive impact on the company’s growth prospects.
Earlier, in the first quarter of 2012, WPP Plc witnessed about a 7.6% revenue growth on the back of strength across all geographical regions and communication services sector. Management is anticipating that the revenue growth will be over 4% for 2012 excluding the impact of acquisitions and currency fluctuations.
The current Zacks Consensus EPS Estimates for WPP Plc are $5.62 and $6.29 for 2012 and 2013, respectively. The estimates represent year-over-year growth of 4.52% for 2012 and 11.86% for 2013.
The company has established itself in the diverse markets through providing advertising and other specialty communications services globally but it should also be aware of the stiff competition from its rivals. This Dublin, Ireland-based advertising and communications services provider competes with other industry players including Focus Media Holding Ltd. (FMCN), Lamar Advertising Co. (LAMR) and National CineMedia, Inc. (NCMI).
We currently maintain a ‘Neutral’ recommendation on WPP Plc. The stock also bears a Zacks #3 Rank, implying a short-term (1-3 months) ‘Hold’ rating.
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