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Publicis, the Paris-headquartered marketing services group, continued its investment in new media by agreeing to buy Business Interactif, a French digital marketing agency, in a deal worth €137m ($182m, £92m).
The deal reflects the high prices at which such digital agencies are changing hands as web advertising and other forms of digital media takes an increasing share of corporate marketing budgets.
It values Business Interactif, which is listed on Euronext Paris, is a multiple of 15 times the €9m of earnings before interest, tax, depreciation and amortisation forecast at the acquired company for 2007. It will be funded half in cash, half by the issuance of 2m new Publicis shares.
Earlier this year Publicis also bought Digitas, a much larger US specialist in digital, direct and healthcare marketing, in a deal worth €1.3bn
The latest acquisition will be integrated into Digitas in a bid to increase the ability of Digitas to serve advertisers in europe and asia.
Business Interactif has offices in Paris, New York, Tokyo and Shanghai, and provides the technology and media placement for digital campaigns, as well as specialist email and search services.
David Kenny, Digitas chairman and chief executive, predicted Digitas would “bulk up further” in asia, possibly by buying technology groups in the region.
Mr Kenny said: “The big winners on the internet are going to be the companies which offer technology services as well as creative services. We will be looking at strengthening our technical backgroud. The creative business I think we can grow organically.”
In recent months Google, Yahoo, Microsoft, AOL and WPP have also made significant digital acquisitions.
Some commentators believe stand-alone digital specialists will struggle to grow as internet marketing becomes mainstream, and larger groups from both the marketing and technology sectors compete harder to win digital marketing budgets.
The buying spree has prompted some commentators to fear that industry consolidation could leave a handful of companies dominating the internet advertising space.
However Mr Kenny said: “Big clients need big scalable systems, and most clients are enthusiastic to see bigger global providers develop in the digital marketing space.”
Publicis is effectively acquiring Business Interactif in two stages. It has agreed to acquire the 49 per cent stake in the business held by its two founders - Emmanuel Henrion and François del Villardière.
The stake is being purchased at €10.10 per share, representing a premium of just under 10 per cent to the closing price of Business Interactif shares on Tuesday.
There will be an offer for the remaining, publicly-traded 51 per cent of the business.